S&P 500 Earnings Growth Estimate Reaches 29.5% as Reports Begin

S&P 500 earnings expectations strengthened as third-quarter reporting begins, with projected profit growth reaching 29.5% year over year despite Treasury yields and inflation that continue to challenge equity valuations.

The estimate is up from 26.7% on June 30. Earnings-per-share forecasts also increased 1.4% between June 30 and Sept. 30, compared with average declines of 2.2% over the past five years and 2.5% over the past decade.

Corporate guidance has been unusually positive. Of the 116 S&P 500 companies that issued third-quarter EPS guidance, 72 gave positive guidance, or 62%. That compares with five-year and 10-year averages of 40% and 41%, respectively.

“At this point in time, 116 companies in the index have issued EPS guidance for Q3 2026,” said John Butters of FactSet.

The earnings outlook is developing alongside financial conditions that can pressure stock valuations. The 10-year Treasury par yield was 5.27% on Oct. 6. The core personal consumption expenditures price index rose 3.0% year over year in August, while personal consumption expenditures rose 0.9% month over month and real PCE increased 0.6%.

Higher yields can reduce the present value of future corporate cash flows, while inflation above the Federal Reserve’s 2% target can keep pressure on monetary policy and borrowing costs. Companies will need to turn elevated forecasts into reported results as the season progresses.

Banks will provide one of the first major tests of the outlook. JPMorganChase is scheduled to release its third-quarter results at approximately 7 a.m. ET (11 a.m. UTC) on Oct. 13, followed by a conference call at 8:30 a.m. ET (12:30 p.m. UTC). The results may offer insight into lending, investment banking and fixed-income portfolios.

The earnings setup follows recent coverage of improving S&P 500 earnings expectations, with the latest estimate showing further upgrades before companies report their results.