It’s no surprise but for Q1 ’24 earnings growth 10 of the 11 sectors of the S&P 500 saw actual earnings growth better than was expected as of April 1 ’24. The only outlier was health care, which may have been non-cash-charges, but health care saw significantly lower earnings growth in Q1 ’24 than was what was expected on April 1 ’24.
Which brings us to the bottom panel or Q2 ’24 expectations as of June 14 ’24.
5 sectors look to have seen lower revisions for expected Q2 ’24 earnings growth within the S&P 500 and those are health care, industrials, materials, real estate and utilities.
Relative to the S&P 500 though, the sectors that carry the market-cap weight are technology, (32.7%), health care (11.8%), financials (12.3%), and consumer discretionary and communication services at 9% each.
Q1 ’24 saw aggregate S&P 500 earnings growth come in at 8.1% as of today, versus 5% as of April 1.
As readers can see, for Q2 ’24, S&P 500 earnings growth is expected to be even stronger at 10.7%, versus 10.4% on April 1, ’24.
What About Revenue Growth?
We probably don’t talk about revenue growth enough but here’s how each S&P 500 sector’s revenue growth expectations have changed in the last 8 weeks:
- Consumer discretionary: +3.8% vs +4.3% on April 19 ’24;
- Consumer staples: +2.1% today vs +2.2% on April ’19 ’24;
- Energy: +6.8% today, vs +3% on April 19 ’24;
- Financials +1.4% today, vs +1.4% on April 19 ’24;
- Health care +6.4% today, vs +6.3% on April 19 ’24;
- Industrials: -0.3% today, vs +1% on April 19 ’24;
- Materials: -1.8% today, vs -0.2% on April 19 ’24;
- Real estate: +6.5% today, vs +7.3% on April 19 ’24;
- Technology: +9.4% today, vs +8.8% on April 19 ’24;
- Communication Services: +6% today, vs +6.3% on April 19 ’24;
- Utilities: +4.8% today, vs +3.3% on April 19 ’24;
- S&P 500: 4.2% today vs 4.1% on April 19 ’24;
Readers should notice that technology is still the highest revenue growth of the 11 sectors. The energy sector had the biggest or largest upward revision to expected revenue growth for Q2 ’24.
Technology may put up 2 years in a row – ’24 and ’25 – of 20% or better earnings growth.
Have to say to readers, that 4% “expected” revenue growth for Q2 ’24 on an expected 10% earnings growth for the S&P 500 isn’t too shabby.
If readers are looking for the proverbial red flag, or what to watch in terms of warnings signs, watch for companies preannouncing negative results, and the more popular the stock is, the greater the impact on the market. However, that’s not really in evidence today.
None of this is advice or a recommendation, only an opinion. Past performance is no guarantee of future results. Investing can involve loss of principal even over short periods of time.
Thanks for reading.