Wall Street Q2 Earnings Season Kicks Off Next Week, S&P 500 Profit Growth Seen Hitting Four-Year High

After a holiday-shortened trading week, U.S. stocks are about to hit a major inflection point: second-quarter earnings season. Based on forecasts from multiple data providers and media outlets, Wall Street banks, tech giants, and energy companies are expected to deliver a standout set of results. But with record-high profit expectations already baked in, the market is starting to ask whether the bar has been set too high — and whether stocks have already priced in the good news.

As of the close on July 8, JPMorgan Chase (JPM), the first major bank to report, was at $330.62, down 2.54% from its July 7 close of $339.22. The stock opened at $336.53, hit an intraday high of $336.53, and touched a low of $330.13. With U.S. markets closed on July 9 for a holiday, the current price reflects the July 8 close, with no pre-market or intraday movement.

Profit Growth Hits Four-Year High, Energy and Tech Lead

According to Axios, citing FactSet data, Wall Street analysts expect S&P 500 companies to report 22.5% year-over-year earnings growth in Q2. Bloomberg’s forecast is even more aggressive, projecting 25% growth, driven by the AI boom and steady economic growth. Axios notes this is the highest growth forecast analysts have given S&P 500 companies since 2021.^[Axios]

The growth story is far from uniform across sectors. The energy sector is the biggest winner, with earnings expected to surge 121%, fueled by a sharp spike in oil prices tied to the ongoing Iran conflict. Meanwhile, the information technology sector — home to Nvidia and Apple — along with leading chip stocks like Micron Technology, is forecast to post 62% growth. Healthcare, however, is under pressure, with earnings expected to fall 9% year-over-year.^[Axios]

The Worry Behind the Lofty Expectations: Can the AI Boom Last?

Despite the high hopes for the upcoming earnings season, some analysts are sounding a cautious note. Capital Economics warned in a note last week that “the AI-related stock market may be approaching a tipping point where earnings expectations and capital expenditure assumptions become unsustainable.” They cautioned that a revision in these areas could “trigger a broad market sell-off.”^[Axios]

Those concerns aren’t unfounded. Yahoo Finance notes that tech stocks showed clear divergence in the first half of 2026. The iShares Expanded Tech and Software ETF (IGV) is down 12% year-to-date. Even the once-dominant “Magnificent Seven” tech giants, as a group, have lost 2% for investors over the past six months.^{[Yahoo Finance]}

In stark contrast to software and mega-cap tech, chip stocks have been on a tear. Yahoo Finance data shows Micron Technology (MU) has surged 308%, Intel (INTC) is up 280%, and AMD (AMD) has gained 173%. Whether this AI hardware-driven momentum can be sustained — and translated into upbeat forward guidance — will be a key focus for the market when Q2 results are released.^{[Yahoo Finance]}

Banks Take the Stage First, Trading Revenue in Focus

As the traditional bellwethers of earnings season, the big banks will report first. JPMorgan is scheduled to release its Q2 results on Tuesday, July 14, widely seen as the unofficial start of the earnings period.^[Axios]

A Reuters report notes that Wall Street investment banks are expected to see a significant boost in Q2 trading revenue, driven by large deals like the SpaceX IPO. The report, citing industry analysis, says the surge in trading activity is likely to lift overall results for the major banks.^[Reuters]

Bank stocks have already shown strong momentum. According to Barron’s, Bank of America’s stock hit an all-time high on Monday, July 6, rising 2% to $59.90. The report notes that Berkshire Hathaway, one of Bank of America’s largest shareholders (trailing only two major index fund investors), has been a big winner in the recent bank stock rally.^[Barron's]

Macro Data and Energy Crisis Intersect, Market Awaits Earnings Validation

Before earnings season kicks into high gear, the market is still digesting a complex set of macro signals. A Yahoo Finance report notes that the June nonfarm payrolls report, released on Friday, July 2, came in far below expectations, with only 57,000 jobs added — roughly half of what economists had forecast. That data has cooled expectations for a Fed rate hike this year. According to the CME FedWatch Tool, following the jobs report, the probability that rates will be higher than current levels by year-end fell to about 75% on Thursday, July 2, from roughly 84% on Wednesday, July 1.^{[Yahoo Finance]}

At the same time, the energy crisis sparked by the Iran conflict continues to put upward pressure on inflation. Fed Chair Kevin Warsh, in his first post-meeting press conference, emphasized the inflation problem and his commitment to bringing it back to the 2% target.^{[Yahoo Finance]} This macro backdrop makes the upcoming earnings season particularly critical: whether companies can deliver results that satisfy the market amid rising costs and an uncertain rate environment will directly determine the market’s direction in the coming weeks.

Beyond JPMorgan, several other major companies will report in the coming weeks. PepsiCo and Delta Air Lines are set to release results later this week, offering clues about the health of the U.S. consumer and the ongoing impact of the energy crisis.^{[Yahoo Finance]} S&P Global has announced it will release Q2 results on July 28, followed by a conference call.^{[Financial Times]} Shell has also published its Q2 update note, with formal results scheduled for July 30.^{[Oil & Gas 360]}

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