The percentage of companies beating earnings estimates is in line with historical averages (around 73%), and earnings are beating forecasts, in aggregate, by nearly 8%. We continue to expect S&P 500 EPS growth of 3-4% in the third quarter.

Our 2023 and 2024 S&P 500 earnings per share estimates are $220 (0% year-over-year growth) and $240 (9% YoY growth), respectively. 

The earnings rebound may take time to revive the fortunes of the equity market, especially against a backdrop of elevated valuations. Rising yields have caused a further deterioration in the equity risk premium – making stocks look less attractive relative to high quality fixed income.

We still expect the improving outlook for earnings to boost stocks over the coming year, with our base case for the S&P 500 to reach 4,700 by the end of 2024.