US Corporate Profit Growth Faces Hurdles as Investors Worry About Sustainability

A massive year for corporate profit growth has driven US stock market gains, but investors are now hesitant that the good times will roll on without a hitch.

Investors are preparing for another robust period of earnings as companies begin reporting third-quarter results in the coming weeks. Full-year earnings from S&P 500 companies are expected to rise a whopping 35%, the highest rate since 2021, which was skewed by the post-pandemic economic rebound.

The S&P 500 has risen about 12% this year, overcoming risks including rising interest rates, the US Federal Reserve's hawkish turn, and the Middle East conflict and related oil price spike. But investors are starting to look beyond 2026, at prospects that companies can sustain strong profit growth.

'Investors like myself are questioning the durability of these huge numbers,' said Walter Todd, chief investment officer at Greenwood Capital in South Carolina. 'We've had great earnings. The bad thing is the (comparisons) are going to be very difficult next year for a lot of these names.'