U.S. corporate earnings growth expectations continue to cool, analysts warn that highly valued U.S. stocks have limited margin for error.

BlockBeats news, October 13: Data compiled by Bank of America shows that although the third-quarter earnings expectations for the S&P 500 remain strong, earnings growth for 10 of the 11 sectors is expected to slow compared with the previous quarter.

Data compiled by industry research shows that analysts expect earnings growth for S&P 500 constituents to slow from 25% in the third quarter of 2026 and 28% in the fourth quarter to 18% in the first half of 2027, indicating a slight weakening in the overall earnings outlook ahead. Slowing earnings growth expectations alone are not enough to end the stock market rally. But with U.S. stocks near record highs and growing concerns that inflationary pressures are more stubborn than expected, American companies must deliver sufficiently strong results to drive the stock market to new highs.

Luca Paolini, chief strategist at Pictet Asset Management, said: "We are seeing early signs that earnings growth momentum may be peaking. Because the bar for earnings growth expectations is so high, even a slight miss could trigger a sharp market reaction."