Asset Management
08/10/2026 Market Strategy
August 10, 2026
Stay the Course
As Earnings Season Winds Down, Focus Turns to the Inflation Reports
Key Takeaways
- The S&P 500 and S&P 400 (midcaps) closed on Friday at new record highs. The two small cap indexes (the S&P 600 and Russell 2000) closed at respective new record highs last Tuesday.
- The S&P 500 Q2 earnings season continues to exceed expectations. The 443 firms that have reported have seen their profits grow 51% from a year earlier, on back of revenue gains of 14.6%. Prior to the start of the season, FactSet put bottom-up earnings estimates at 23.6% from a year earlier.
- Ten of the 11 sectors are seeing earnings growth, with eight of those at double-digit (or greater) rates. Three sectors are seeing their earnings more than double from a year earlier. Only the healthcare sector is seeing its earnings decline (off 7.5% despite revenue growth of 7.6%).
- This week 11 S&P 500 companies are slated to report, with just 13 set for the week of Aug. 17 as the season winds down.
- This week brings inflation reports for July with the CPI and PPI due. Bloomberg’s survey shows a rise of just 0.1% expected for headline inflation and 0.2% for the “core” rate (excluding food and energy) as oil prices declined in the month.
Continued strong results reported for Q2 earnings season along with economic data that showed acceleration in services and manufacturing activity even as jobs declined in July, lent support for the Fed to remain “on hold.” Stocks rallied in response, sending the S&P 500 and S&P 400 (midcaps) to new record highs on Friday.
Earnings results thus far have continued surprising to the upside with the 51% growth rate reported at this point more than twice the 23.6% bottom-up growth rate expected by analysts in FactSet’s survey prior to the season’s start.
Q2’s Robust Earnings Results
With 443 companies or 89% of the companies in the S&P 500 having reported Q2 results through last Friday, earnings remained impressive with 86% of companies having beaten earnings expectations according to FactSet.
With just 11% of the S&P 500’s companies left to report results, this earnings season 10 of the 11 sectors of the S&P 500 are seeing positive earnings growth from a year earlier. Three sectors have posted triple-digit earnings growth including energy, consumer discretionary, and communication services. Another five sectors have delivered double-digit earnings growth -- including information technology, materials, financials, industrials, and utilities. Two sectors (real estate and consumer staples) have reported single digit earnings growth. That leaves just one sector, health care (regarded as a highly defensive sector), posting negative single-digit earnings growth in Q2. See page 8 of this report for details on Q2 earnings in our Earnings Scorecard.
Results thus far have continued to surprise to the upside with the 51% growth rate reported at this point more than twice the 23.6% bottom-up growth expected by analysts in FactSet’s survey prior to the start of the season. In addition to these solid reported results, a number of company managers in key sectors have provided positive forward guidance, suggesting that conditions are favorable for further improvement ahead.
This week just 11 companies of the S& 500 are scheduled to report results including widely followed names in information technology, consumer discretionary, health care, industrials, and real estate.
In our view the fundamentals appear to look overall positive for stocks notwithstanding plenty of noise that in recent weeks raised levels of volatility in the stock, bond, and commodity markets.
From our position on the market radar screen, the day-to-day direction of the markets is likely to persist having a potential to run contrary to positive fundamentals both economic and 2 corporate in yielding catalysts for bears, skeptics, and nervous investors to take some profits without FOMO (fear of missing out) on some days in what appears to us to be a secular bull market with legs to keep climbing the proverbial wall of worry.
Stocks Are Relatively Cheaper
We see a silver lining to the over-hanging clouds of recent volatility and selling that has lowered somewhat the forward earnings multiple of the S&P 500 which ended last week at 20.3x the next 12-month earnings estimates. That’s just 0.5% above its five-year average forward multiple and 12.9% below the five-year high of 23.3x. See page 11 of this report for details in our weekly update on market valuations across the S&P 500 and the mid-cap and small-cap indices.
Context Remains Key
Change and progress are seldom universally welcome when they arrive on the scene. And so it is that concerns surrounding AI seem of late to be near a crescendo level in some corners of the market.
Our view remains that innovation that looks to be transformational such as AI is seldom received with open arms by one and all and instead is often viewed with suspicion and fear and too oft-predicted to be anything but a boost to productivity, presenting opportunities for business, new and better jobs for labor, and presenting efficiencies and conveniences for the consumer.
A Reiteration
When it comes to technological innovation in the current cycle, we have coined the phrase, “we’re all on the upgrade cycle whether we like it or not.”
We have found that keeping expectations right sized and having a sense of context along with patience and diversification to be helpful in navigating periods of transition and heightened uncertainties over four decades of market cycles, booms and busts.
Resilience Remains the Operative Word
Prudent monetary policy, robust revenues and earnings growth, and resilience in key economic data have helped markets navigate troubled waters since the Great Financial Crisis through the COVID-19 pandemic and so far through the current transitional period that includes a change in Federal Reserve leadership along with advancements in AI and the potentially transformational technology it could deliver.
Where We Stand
We remain positive on stocks particularly in the US as well as from a global perspective as the current conflict in the Middle East moves towards resolution and the economic backdrop shows opportunity to move towards “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.
We expect the Fed to remain independent under the leadership of Kevin Warsh. We were not surprised by the recent FOMC rate decision to remain “on hold” with no change in the Fed’s benchmark rate.
Key to the direction markets will take this week will be the results of the eleven companies of the S&P 500 that will report Q2 results along with economic data that include inflation numbers tied to the CPI and PPI reports scheduled for release on Wednesday and Thursday this week.
Developments in the negotiations in the Middle East of course will remain a potential mover of the prices of asset classes this week as well.
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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