About a third of S&P 500 companies have reported their third-quarter earnings. But the real fireworks are coming.
Another sign of the top-heavy nature of the S&P 500 is the reliance on just a small number of stocks to drive profits. It turns out that just eight stocks in the S&P 500, including Microsoft, Apple and Alphabet, are projected to account for 25% of the index's total adjusted net income, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSurge. And most of the giant tech firms in the S&P 500 are due to report quarterly results this week.
The earnings season up to this point has largely been a sideshow to this week's main event. "We think the Magnificent Seven will not disappoint," said Nancy Tengler, CEO at Laffer Tengler Investments. "Whether that results in price outperformance we will see."
How S&P 500 Earnings Are Doing So Far
Nearly 40% of S&P 500 companies have reported their third-quarter earnings, says John Butters of FactSet. And things are looking fine so far.
At this point, earnings growth is coming in at 3.6% on average. If that's the final growth, it would mark the fifth-straight quarter of year-over-year growth. And so far, 75% of reporting companies topped earnings expectations.
That's all well and good. But the reports that matter most are due this week.
Which S&P 500 Companies' Results Matter Most?
There's a three-way tie for the S&P 500 company whose profit holds the most sway.
Microsoft, Apple and Alphabet are each seen contributing 4.3% of the S&P 500's total adjusted net income for the period. Microsoft is expected to report 4% higher earnings per share on Oct. 30. The stock could use some good news, with its RS Rating at just 57.
Apple's stock is running up lately, pushing its RS Rating to 82. The company is seen putting up 4% earnings growth for the quarter. It already carries an EPS Rating of 86. Apple reports on Oct. 31.
And Google parent Alphabet's earnings are seen falling 15% in the third quarter. But that's coming off tough year-ago comparisons. Earnings this year are seen jumping 33%. And the stock already has an EPS Rating of 98. Alphabet is expected to report on Oct. 29.
Not Just S&P 500 Tech
The Big Tech firms are huge drivers of profit. But they're not alone.
Two of the top sources of net income in the period are financials: JPMorgan Chase, which reported on Oct. 11, and Berkshire Hathaway. Berkshire Hathaway, seen contributing 2.2% of the S&P 500's profit in the third quarter, reports on Nov. 4.
So yes, earnings season is shaping up well so far. But there's still a long way to go.
Top S&P 500 Profit Contributors
Based on third-quarter net income estimates
| Company | Ticker | % | Report date |
|---|---|---|---|
| Microsoft | MSFT | 4.3% | 10/30/2024 |
| Apple | AAPL | 4.3% | 10/31/2024 |
| Alphabet | GOOGL | 4.3% | 10/29/2024 |
| Nvidia | NVDA | 3.4% | 11/27/2024 |
| Meta Platforms | META | 2.5% | 10/30/2024 |
| JPMorgan Chase | JPM | 2.3% | 10/11/2024 |
| Amazon.com | AMZN | 2.3% | 10/31/2024 |
| Berkshire Hathaway | BRKB | 2.2% | 11/4/2024 |
