Asset Management
07/20/2026 Market Strategy
July 20, 2026
Something for (Almost) Everyone
Earning Season Ramps Up This Week
Key Takeaways
- US stocks traded mixed last week as stocks bounced between gains and losses to end the week mostly lower.
- The Q2 earnings season got off to a solid start last week. Among the 47 companies that reported, some produced outsized results, particularly among names in the technology and financial sectors.
- This week 86 companies of the S&P 500 are slated to report, with 175 set for the week of July 27. FactSet put bottom-up earnings estimates at 23.6% from a year-earlier.
- Last week’s CPI and PPI inflation reports showed inflation moderating in June as oil prices fell sharply in the month. Prices of other items also moderated as retailers cut prices to lure cash-strapped consumers.
- Retail sales data remained resilient and suggest a pick-up in consumption growth is likely for Q2.
A busy week lies ahead with 86 companies in the S&P 500 scheduled to report results in the ongoing S&P 500 Q2 earnings season. Among the companies reporting this week will be widely followed names belonging to sectors that include information technology, communications services, financials, consumer discretionary, energy, industrials, materials and health care.
While stock valuations remain full, P/E multiples among the sectors and market capitalizations have broadly come off the boil with the forward P/E multiple of the S&P 500 standing last week at 20.2x versus 23.3x just 3 years ago.
With that in mind traders and longer-term investors will likely have no small amount of focus assigned to results and any news or guidance over the course of the week seeking insight as to the impact of AI capex on cash flow, revenue and earnings growth realized and projected. Their interest should be especially heightened after last week’s ruckus in the technology and communications sectors which drew a considerable amount of market participants’ attention as the Philadelphia Semiconductor index slid just under 10%.
How Low Can You Go?
That said, the Philadelphia index (also known as the “SOX index”) having experienced a drop of some 20.2% from a high of 14634.72 on June 22 to a recent low of 11,673.9 is still up some 64.8% on a YTD basis―suggesting that it may have been “somewhat ahead of its skis” when at its June peak it was up a little over 100% from the start of the year.
Under the gaze of traders and investors this week will be economic data that should provide further views on the quality of what appears to remain a decidedly resilient economy―even if at a slower economic pace than seen in some recent quarters as a result of still sticky domestic inflation concerns linked to the most recent breakout of hostilities in the Middle East.
Keeping Expectations Right-Sized
As we noted in last week’s note, consensus analyst expectations coming into this week and projections for Q2 earnings season are the highest we’ve seen for some time with earnings projected for the quarter to grow at a rate of 23.6% from a year earlier. Prior seasons’ analyst expectations had been relatively modest and in comparison usually had been somewhere between single digits or modest double digits for the broad market benchmark and its 11 sectors outside of historical recessionary periods.
That said―and with only 47 or just under 10% of the firms in the S&P 500 index having reported thus far―and it being much too early to draw conclusions about second-quarter results―Q2 earnings season continues to be off to a good start.
The five firms (out of a total of 65) in the information technology sector that have reported Q2 earnings growth reads up 243% from a year earlier on revenue growth of 67%.
Earnings at financial firms (with 19 of 80 having reported) were up 38% on revenue growth of 18%.
We expect more to be revealed this week and in the weeks that immediately follow as Q2 earnings season moves forward with 175 firms to report the week of July 27.
The Bar for Earnings Season Remains Set Higher Than Usual
As we noted in last week’s MSRS, prior quarters have usually begun with consensus analyst expectations set significantly lower than the results corporations eventually reported.
This suggested to us that any disappointments in the current reporting season were likely to be dealt with somewhat harshly—while positive surprises that weren’t simply “over the top” could be met with a “just what have you done for me lately?” or a “buy the rumor and sell the news” type of response from traders and other denizens of the markets.
Indeed, market participant reactions last week were in-line with our expectations if even “more dramatic” than we’d expected based on the overall good quality of results for the second quarter as well as a well-received first Humphrey Hawkins presentation on Capitol Hill (with Q&A) by the new Fed Chair Kevin Warsh which met and even exceeded our expectations.
We continue to expect good results for S&P 500 earnings this reporting season as fundamentals remain in our view conducive to continued economic growth that should be supportive of revenue and earnings growth going forward.
While stock valuations remain full, P/E multiples among the sectors and market capitalizations have broadly come off the boil with the forward PE multiple of the S&P 500 standing last week at 20.2x versus 23.3x just three years ago.
Questions as to how long infrastructure investments by the hyper-scalers will take to become profitable continue to take considerable mind share in the day-to-day market action with concerns about the effect on the markets and economic growth should hyper-scalers cut back on their investments in memory chips and other key ingredients needed for the AI buildout.
We continue to find it odd that some investors appear to expect investments in AI infrastructure to show profitability so soon to the current buildout. Sizeable advances in technological innovation don’t come cheap and take time for their effect to be realized. The interest in AI developments and the efficiencies it can provide business, labor, education, and the consumer appear to be real if not easy to digest in the near term.
Where We Stand
We remain positive on stocks with an overweight for the US markets but also with consideration of a global perspective when the current conflict in the Middle East regains the moment to move toward resolution and the economic backdrop shows opportunity for the arrival of “the next new normal.”
Our favorite sectors of the S&P 500 remain: information technology, communications services, industrials, financials, and consumer discretionary.
We continue to favor GARP (growth at a reasonable price) stocks, and “growthier” value (avoiding value traps) and the weighting of cyclical sectors and stocks over defensives.
Name:
John Stoltzfus
Title:Chief Investment Strategist, Oppenheimer Asset Management Inc.
John is one of the most popular faces around Oppenheimer: our clients have come to rely on his market recaps for timely analysis and a confident viewpoint on the road forward. He frequently lends his expertise to CNBC, Bloomberg, Fox Business, and other notable networks.
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