U.S. Stock Market Sees Q2 Earnings Growth Far Beyond Expectations, Wall Street Raises S&P 500 Year-End Average Target to 7894 Points

BlockBeats News, August 16th, according to Bloomberg, the S&P 500 Index's constituent stocks saw a 31% year-on-year earnings growth in the second quarter, exceeding the previous expectation of 23%, marking the strongest increase since Bloomberg industry research data has been available since 1992, excluding the recovery phase after a major recession. Over 90% of the S&P 500 constituent stocks have reported their earnings, and the overall first-half earnings performance is expected to be the best since 2021.

Analysts believe that the earnings exceeding expectations are partly due to the resilience of the U.S. economy and partly benefiting from the profit margin improvement brought by AI. The net profit margin of S&P 500 constituent stocks has risen from the previous hard-to-break 14% to nearly 16%. Mark Hackett, Chief Market Strategist at Nationwide, stated that AI has been a cost center in recent years, but this year has reached a turning point, shifting towards a profit center.

With earnings growth outpacing the index's rise, the S&P 500's forward 12-month P/E ratio has decreased from about 26 times at the beginning of the year to slightly below 22 times. Wall Street strategists have also been consistently raising their expectations, with the current year-end target for the S&P 500 averaging 7894 points, representing about 1% upside from this week's record high; the full-year earnings growth expectations have been raised from 15% at the beginning of the year to 27%.

This round of earnings growth is no longer confined to large tech companies. As of August 12th, of the approximately 1500 U.S. listed companies that have reported their performance, about three-quarters have simultaneously exceeded earnings per share and revenue expectations, with healthcare being the only sector in the S&P 500 to experience earnings contraction in the second quarter.