Most S&P 500 sectors set for Q2 earnings decline

Seven of the S&P 500's 11 sectors are set to post cumulative second-quarter earnings declines, according to S&P Global Market Intelligence data.

Analysts expect the S&P 500's energy sector will post the largest year-over-year drop in cumulative EPS at 26.5%, as 15 of the sector's 23 stocks are poised for declines, according to estimates as of July 9. Front-month WTI crude oil futures prices have fallen by about 19% in the past year.

Information technology stocks meanwhile, should post the largest cumulative EPS gain, 17.1%, driven by expected growth at mega-cap tech companies NVIDIA Corp., Microsoft Corp. and Apple Inc. Within the S&P 500's information technology sector, 54 of 69 stocks are poised for EPS growth.

Overall, the S&P 500's cumulative EPS is set to grow by 1.8%.

The earnings season should also give the first glimpse of the impacts of President Donald Trump's tariffs on many US trading partners. While the imposition of global tariffs has been postponed to Aug. 1, the administration has already imposed tariffs on Canada, Mexico and steel and aluminum imports.

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Largest expected beats, misses

Analysts predict Expand Energy Corp. will post the widest normalized EPS beat against expectations in its second-quarter earnings report on July 29, with the predicted $1.34 per share well outpacing the 1 cent normalized EPS reported in the same quarter of 2024.

Albemarle Corp., meanwhile, is forecast to post the largest annual decline in second-quarter earnings, swinging to a normalized loss per share of 67 cents from EPS of 4 cents a year earlier. In a first-quarter earnings release, Albemarle maintained its fiscal 2025 earnings outlook, citing exemptions on tariffs for certain critical minerals that offered a degree of certainty amid an unclear global trade picture.

Most of Magnificent 7 likely to grow as smaller companies struggle

The S&P 500's largest stocks at the end of the second quarter — NVIDIA, Microsoft, Apple, Amazon.com Inc. and Alphabet Inc. — are all expected to post normalized EPS gains year over year on higher revenues, according to Market Intelligence data. The companies are all part of the market-driving "Magnificent Seven" group, that also includes Meta Platforms Inc. and Tesla Inc.

Analysts predict Meta's normalized EPS will rise by about 13% to $5.83, though Tesla's earnings are forecast to fall by more than 19% on an expected drop in revenue.

Smaller companies, meanwhile, may fare worse. More than half of the 211 S&P stocks with a market capitalization below $30 billion as of June 30 are expected to post a drop in normalized EPS in the second quarter from a year ago.

The largest companies within that group — steel manufacturer Nucor Corp., managed care insurer Humana Inc., computer server and storage provider Super Micro Computer Inc., care and beauty products maker The Estée Lauder Cos. Inc. and homebuilder Lennar Corp. — all face expectations of declines in normalized EPS versus the second quarter of 2024.