S&P 500 Earnings Forecasts Reflect Mixed Sector Performance

Key Earnings Trends and Observations

• Total S&P 500 earnings for the June quarter are projected to rise by 5.5% compared to last year, driven by a 3.8% increase in revenues. Notably, there is broader pressure on estimates than in previous periods.

Moving to sector performance, Q2 earnings estimates for 15 of the 16 Zacks sectors have decreased since the quarter commenced, with Aerospace being the only sector to see an increase in estimates. While Tech sector estimates have also declined throughout the quarter, they have stabilized in recent weeks.

• The Q1 reporting cycle is nearly complete, with results from fewer than two dozen S&P 500 members still pending. Nine of the 16 Zacks sectors have concluded their Q1 earnings cycle.

• For the 477 S&P 500 companies that have reported Q1 earnings, there is an 11.4% increase from last year, alongside a 4.4% rise in revenues. Additionally, 74.2% of these companies exceeded EPS estimates while 62.9% surpassed revenue estimates.

Retail Sector Struggles

Within the Retail sector, Q1 earnings for 28 out of 33 companies in the S&P 500 show an 11.2% increase from the same period last year, paired with a 5.0% rise in revenues. However, only 60.7% beat EPS estimates, and 57.1% exceeded revenue estimates.

Despite this growth, the Zacks Retail sector—distinct from the Standard & Poor’s Consumer Discretionary and Staples classifications—faces challenges. It includes companies such as Amazon (AMZN), McDonald’s (MCD), Walmart (WMT), and Target (TGT).

Analyses from past periods indicate that these Retail companies struggle to meet EPS and revenue estimates. Excluding Amazon, the sector’s earnings growth of 11.2% shifts to a decline of 5.0%.

The forecast for Retail sector earnings growth this year is 4.1%, following 22.7% growth in 2024. However, this growth primarily stems from Amazon, with adjusted numbers showing a decline without its contributions.

A significant factor in diminished earnings stems from margin pressures linked to logistics and fulfillment associated with e-commerce growth.

Illustrated charts reveal Retail sector margins outside of Amazon are on the decline since 2021, with expectations of a bottoming out this year, potentially leading to future recovery.

Future Expectations and Market Challenges

The start of Q2 has been marked by increased tariff uncertainty stemming from punitive announcements on April 2. Although implementation has been delayed by three months, it has heavily influenced earnings estimates for upcoming quarters.

Current expectations suggest S&P 500 earnings for Q2 will increase by 5.5% relative to last year, with revenues up 3.8%. In contrast, the magnitude of estimate cuts seen so far for Q2 is greater than in comparable periods in recent quarters.

Since the quarter began, estimates have declined across 15 of the 16 Zacks sectors, with the most significant declines in the Transportation, Autos, Energy, Construction, and Basic Materials sectors. Conversely, Aerospace is the only sector that has experienced favorable revisions.

Estimates for the two largest earnings contributors, the Tech and Finance sectors, have also seen reductions. The Tech sector is expected to report a 11.9% increase in Q2 earnings, supported by a 9.9% rise in revenues.

# Tech Earnings Projections Stabilize Despite Ongoing Market Uncertainty

The Tech sector is recovering from depressed expectations earlier this year, as data shows recent stabilization in earnings revisions. Current revisions are materially below levels seen at the start of April but have begun to stabilize.

Chart analysis reveals that full-year estimates for 2025 in the Tech sector are now showing less downward pressure. This sector is crucial, comprising nearly one-third of the S&P 500 earnings.

2025 Earnings Outlook

Updated forecasts for Q1 2025 reflect a comparison to achievements from the previous four periods and current expectations upcoming quarters.

Annual earnings projections for the S&P 500 show a similar trend, revealing limited changes for the next two years despite recent pressures on this year’s estimates.

While stocks have regained losses associated with tariff issues, the economic outlook remains uncertain. Macro uncertainties continue to affect earnings estimates, especially regarding tariff visibility.

The broader earnings landscape for the S&P 500 is stabilizing as well, with most estimates holding steady for the immediate future.

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