2026-01-13 11:56Summary of Earnings Season Preview for 4Q25 Industry Overview - The report focuses on the S&P 500 index and its earnings performance for the fourth quarter of 2025 (4Q25) - The technology sector, particularly the "Big 6 Tech+" companies, is highlighted as a key driver of earnings growth Core Insights and Arguments - Earnings Growth Projections: - S&P 500 EPS is forecasted to grow by 8.8% in 4Q25, with expectations that it may finish closer to 12.2% due to historical trends and potential earnings beats [1][10][20] - The technology sector is expected to lead with an EPS growth of 21.5%, significantly outpacing the rest of the S&P 500, which is projected to grow at only 1.4% [9][10] - Sector Performance: - Eight out of eleven sectors are anticipated to show positive growth, with the technology sector being the standout performer [1] - The materials sector is expected to see an EPS increase of 8.8% in 4Q25, with a forecasted acceleration to 20.9% for the full year 2026 [9] - The industrials sector is projected to contract with an EPS growth of -2.4%, heavily influenced by Boeing's performance [9] - Financials, which had strong growth in previous quarters, are expected to moderate to 6.7% this quarter [9] - Earnings Revisions: - Revisions for S&P 500 earnings are slightly above historical trends, particularly driven by the technology sector [2] - The consensus for 2026 EPS expectations for S&P 500 ex-Tech+ has remained stable since June, contrasting with typical declines [2] - Early Reporters: - Early reporting companies have exceeded EPS estimates by 14.3%, significantly above the historical average of 4.9% [3][39] Additional Important Insights - Margin Expectations: - S&P 500 margins are expected to increase by 70 basis points, the lowest expectations since 2Q23, with anticipated margin contractions in several sectors including telecom and healthcare [2] - Top Contributors and Detractors: - Notable contributors to EPS growth include NVIDIA (EPS growth of 70.7%), Microsoft (22.7%), and Alphabet (22.0%) [28] - Detractors include Uber (-75.8%), UnitedHealth Group (-69.1%), and Ford (-73.5%) [29] - Market Dynamics: - The report indicates a potential setup for a low bar in earnings expectations, particularly for sectors outside of technology [9][22] - Future Outlook: - The broader S&P 500 is expected to see a full-year EPS growth of 10% for 2026, with technology continuing to drive significant growth [9] This summary encapsulates the key points from the earnings season preview for 4Q25, highlighting the expected performance of the S&P 500 and its sectors, particularly the technology sector's influence on overall market growth.