Group 1 - The quarterly reports from Pepsi and Delta Airlines, among others, will contribute to the September-quarter earnings tally for the S&P 500 index [1] - Q3 earnings for the S&P 500 are expected to increase by +5.4% year-over-year, with revenues up by +6.1%, marking the lowest earnings growth since Q3 2023 if actual growth aligns with expectations [2][8] - Positive revisions in earnings estimates have been noted for Q3 and Q4, with 7 of the 16 Zacks sectors seeing increased estimates for Q4 [3][5][7] Group 2 - Pepsi is expected to report earnings of $2.27 per share on revenues of $23.88 billion, reflecting a year-over-year decline of -1.7% in earnings and an increase of +2.4% in revenues [12] - Delta Airlines is projected to report earnings of $1.60 per share on revenues of $15.93 billion, indicating a year-over-year increase of +6.7% in earnings and +1.6% in revenues [15] - Year-to-date, Pepsi shares are down -6.1%, while Delta shares have decreased by -5.2%, both lagging behind broader market gains [13][16] Group 3 - Among the 19 S&P 500 members that reported results for fiscal quarters ending in August, total earnings increased by +11.9% year-over-year, with 73.7% beating EPS estimates [17] - The overall earnings picture for the S&P 500 index shows expected EPS growth rates of $258.12 for 2025 and $290.98 for 2026 [25]

Group 1: Earnings Expectations - Q3 earnings for the S&P 500 index are expected to increase by +5.3% year-over-year, with revenues up by +6.1% [2][9] - This anticipated growth would mark the lowest earnings growth pace since Q3 2023, which had a growth rate of +4.4% [2] - Positive revisions in earnings estimates have been noted for Q3, contrasting with the trends observed in the first two quarters of the year [3][5] Group 2: Sector Performance - Since July, Q4 estimates have increased for 7 out of 16 Zacks sectors, including Tech, Finance, and Energy [7] - The Tech sector is expected to continue as a growth driver, with earnings projected to increase by +12% in Q3 2025 and +8.7% in Q4 2025 [10] - Despite positive revisions in some sectors, 8 out of 16 sectors are experiencing pressure on Q4 estimates, particularly in Consumer Discretionary and Medical sectors [10] Group 3: Company-Specific Reports - Nike is expected to report earnings of $0.28 per share on revenues of $11 billion, reflecting year-over-year declines of -60% and -5% respectively [11] - Carnival is projected to report earnings of $1.32 per share on revenues of $8.07 billion, with year-over-year increases of +3.9% and +2.3% respectively [12] - Nike's stock has decreased by -8.4% year-to-date, while Carnival's shares have increased by +23.1% in the same period [11][12]

Core Insights - Companies that excel in growing free cash flow margin outperform other metrics including upward earnings revisions, revenue growth, net income growth, and price momentum [1] Summary by Categories - **Free Cash Flow Margin**: Companies with a strong focus on increasing free cash flow margin demonstrate superior performance compared to other financial metrics [1] - **Earnings Revisions**: The ability to grow free cash flow margin correlates positively with upward revisions in earnings forecasts [1] - **Revenue and Net Income Growth**: Companies that enhance their free cash flow margin also tend to experience better revenue and net income growth [1] - **Price Momentum**: There is a notable relationship between growing free cash flow margin and positive price momentum in the market [1]

Market Outlook & Fed Policy - The market anticipates the Federal Reserve (Fed) will begin cutting rates within the next 2 to 6 months [1] - The company's house call forecasts no rate cuts this year, but anticipates seven cuts next year, which is considered highly bullish for equities [1] - The Fed's decisions are based on lagging economic data, while the equity market and earnings revisions are already indicating future trends [2] - Lagging labor and inflation data are expected to decline later this year and next year, potentially leading to rate cuts [3] Earnings Revisions & Sector Opportunities - Gradual headcount reductions by companies could lead to increased margins and upward revisions [4] - The company has been overweight financials, industrials, and software since April, as these sectors have shown the strongest revisions [5] - The biggest opportunity lies in areas that have not yet experienced these revisions, such as housing-related, commodity-related, and some consumer goods areas [6][7] - Tariffs may temporarily reduce revision breadth in the short term due to increased cost of goods sold, potentially creating buying opportunities in lagging areas, including small caps [7] Market Concentration & Earnings Growth - Market performance is concentrated in a handful of stocks due to their earnings growth and free cash flow [8] - The underperformance of banks in the first quarter was due to poor performance in seven or eight divisions, API CapEx deceleration, and decelerated revenue growth [9] - The "Magic Seven" stocks led the market recovery from April lows due to their size, liquidity, and a bottoming in revision factors [10] - A weaker dollar benefits large multinationals, particularly some of the "Magic Seven" [11] - The ability to sell previously restricted chips to China will significantly boost gross margins for the next year [11][12] Investment Strategy - The company's investment strategy focuses on earnings rather than lagging economic data [13]

The fifth volume of the Yahoo Finance Chart book is here. And essentially what this project is is I ask strategists across Wall Street and economists across Wall Street a simple question. What is the most important chart for investors right now.And we can sort of form a consensus of what people are thinking about, what the risks are out there, and what the top things are that for this chart book have been driving this stock market rally. If we go back to January, a lot of uh contributors had told us that th ...

Core Insights - The earnings revisions trend has shifted from a negative to a positive outlook, particularly noted in recent weeks as the Q2 earnings season progresses [2][4][14] Earnings Performance - For the 198 S&P 500 companies that have reported Q2 results, total earnings increased by +7.0% year-over-year, with revenues up by +5.5%. Approximately 82.8% of these companies exceeded EPS estimates, and 79.8% surpassed revenue estimates [4] - In the Tech sector, earnings rose by +15.2% year-over-year, with revenues increasing by +10.6%. Notably, 90.9% of Tech companies beat EPS estimates, and all reported exceeded revenue estimates [4] - The Finance sector saw a +17.6% increase in earnings year-over-year, with revenues up by +5.8%. Here, 90.0% of companies beat EPS estimates, while 76.0% surpassed revenue estimates [4] Sector Estimates - Since the beginning of Q3, earnings estimates have increased for half of the 16 Zacks sectors, including Finance, Tech, and Consumer Discretionary [5] - Q3 earnings for the Tech sector are projected to grow by +8.0% year-over-year, with revenues expected to rise by +11.2% [6] Company-Specific Estimates - Meta Platforms is expected to report Q2 results on July 30, with a projected EPS of $5.92 for Q3, reflecting a +1.2% increase over the past week and +2.6% over the past month [8] - Nvidia is anticipated to report Q2 results on August 27, with an expected EPS of $1.60 for Q3, showing a +0.9% increase over the past week and +1.8% over the past month [8] Future Earnings Expectations - The positive results from nearly 40% of S&P 500 members have led to an increase in Q2 earnings growth expectations, now projected at +7.6% year-over-year, with revenues expected to rise by +5.2% [10]

Investment Rating - The report maintains an overweight stance on Financials and Industrials sectors, indicating a positive outlook for these areas [6][31]. Core Insights - The equity market has shown resilience despite new tariff announcements due to limited import cost exposure for S&P 500 industries, perceived temporary nature of higher tariff rates, and significant drawdowns already experienced by tariff-sensitive equities [5][7]. - The new tax bill is supportive of large-cap equity indices, with reinstated and expanded expensing likely to lower the "cash" tax rate, positively impacting cash flow for companies, particularly in Tech, Communication Services, and Healthcare sectors [21][22][30]. - Earnings revisions breadth has improved significantly, transitioning from -25% in mid-April to +3% currently, which has supported market stability amid trade and macroeconomic uncertainties [6][13]. Summary by Sections Tariff Impacts - Limited import cost exposure for S&P 500 industries due to exemptions and ongoing negotiations has mitigated immediate risks from tariffs [5][8]. - Significant risks remain if tariff rates on China increase or if the USMCA exemption for Mexico is discontinued, which could affect multiple industries with high import cost exposure [10][21]. Tax Bill Implications - The "One Big Beautiful Bill" is expected to enhance cash flow for large-cap corporates through upfront R&D expensing and bonus depreciation, particularly benefiting capital-intensive sectors [21][30]. - The Foreign-Derived Intangible Income (FDII) incentive is designed to encourage US companies to retain intellectual property domestically, benefiting sectors with significant foreign sales [34][35]. Earnings Revisions and Market Trends - The breadth of earnings revisions has shown a positive trend, with Financials and Industrials sectors experiencing the most significant rebounds [6][13][24]. - The upcoming earnings season is expected to reflect a low bar for 2Q earnings, with a consensus expectation of 4% year-over-year EPS growth and 3% sales growth [52][63].

Strategists at Bernstein Societe Generale recommended buying Indian stocks with upward earnings revisions to navigate the market’s lofty valuations https://t.co/R3N4rORlx1 ...

Market Overview & Economic Concerns - Earnings estimates are declining, with decreases observed in almost every week over the past 10 months, specifically since April [1][2] - The economy is slowing, evidenced by economic surprise indices and retail sales data [3] - Market's high valuation, trading at over 22 times earnings, more than three times sales, and more than five times book value, raises concerns [3] - Risk-reward equation favors risk, suggesting a defensive posture [4] Investment Strategy & Defensive Positioning - Recommends raising cash, suggesting a 10-15% cash position is currently yielding returns [4][5] - Stock market upside potential is estimated at 3-5%, while downside risk could be 15% or more [5] - Suggests gold as a defensive play, noting its outperformance of the stock market since the 2022 bear market lows [6][7] - Advocates for at least a 5% allocation to gold, potentially more, given economic and geopolitical uncertainties [7] Macroeconomic Factors & Policy Impact - Wage inflation is a real factor impacting businesses [9][10] - The timing of potential Federal Reserve rate cuts is uncertain, with conflicting signals from Fed officials [10] - Concerns exist regarding the impact of the tax bill on the budget deficit [11][12] - Maintaining some cash enables investors to avoid selling at market bottoms and provides opportunities to buy during downturns [13][14]

Investment Rating - The report maintains an "Overweight" rating for Capital Goods and Software sectors, indicating a favorable outlook for these industries [57]. Core Insights - Leading indicators suggest a stronger earnings backdrop than anticipated, with high-single-digit EPS growth projected over the next year [4][9]. - Earnings revisions breadth has improved significantly, moving from -25% in mid-April to -9%, indicating a positive shift in earnings expectations [4][9]. - The Non-PMI Leading Earnings Indicator points to mid-teens EPS growth by the first half of 2026, driven by stable demand and reduced material costs [4][9]. - A weaker US dollar, down 11% from January highs, is expected to provide additional support for US earnings trends, with further downside anticipated [4][9]. Summary by Sections Earnings Outlook - The main earnings model forecasts high-single-digit EPS growth for the next year, supported by improving earnings revisions breadth [4][9]. - The Non-PMI Leading Earnings Indicator suggests mid-teens EPS growth by 1H26, driven by demand stability and lower material costs [4][9]. Sector Preferences - Capital Goods and Software sectors are highlighted as key beneficiaries of a weaker dollar, with significant inverse correlations between earnings revisions breadth and the dollar [16][21]. - Capital Goods are expected to benefit from infrastructure build-out, while Software is positioned to leverage GenAI for cost efficiency and revenue growth [13][15]. Market Dynamics - The report emphasizes the importance of earnings revisions breadth as a driver for industry group outperformance, particularly for Capital Goods and Software [12][22]. - The US equity market is preferred over international equities due to stronger earnings revisions in the US compared to Europe and Japan [22]. Financial Sector Insights - The Financials sector is viewed positively, with expectations of a stabilizing M&A environment and resilient consumer conditions [31][33]. - Companies are leveraging AI to enhance operational efficiency, which is expected to contribute positively to earnings growth [37][39].