S&P 500 Earnings Growth Surges Amid Rising Interest Rates

The S&P 500's price performance has slowed down despite sharp earnings growth among its companies. The expected earnings growth of S&P 500 companies in Q2 2026 increased from 23% on June 30 to 50% by August 7. Anticipated growth for the 2026 financial year is now at 30%. By August 7, 88% of companies had reported their Q2 2026 results.

Eighty-six per cent of S&P company earnings and 76 per cent of revenues exceeded analysts' expectations. The S&P 500's price performance has been affected by rising interest rates in the US. However, the weaker-than-expected US nonfarm payrolls figure on August 7 eased the pressure on the Fed to raise its policy rate.

The forward 12-month price-to-earnings (P/E) ratio of the S&P 500 was 20.0 as of August 7. Analysts now expect companies in the S&P 500 to achieve 30% earnings growth for the full year of 2026, up from previous expectations.