Q2 earnings season faces a 23.8% growth bar as Piper Sandler sees upside

Wall Street has set a sky-high bar for second-quarter earnings, but Piper Sandler says corporate America can still clear it.

S&P 500 companies are expected to post 23.8% earnings growth in Q2, the highest bar in two years, as the reporting season kicks into high gear this week.

"Expectations are elevated, but we see no signs of earnings momentum rolling over," Savita Subramanian, head of US equity strategy at Bank of America, said. Piper Sandler analysts similarly forecast that corporate America will meet or beat the elevated forecasts.

Total S&P 500 earnings for Q2 are expected to increase 23.8% from a year earlier on 11.3% higher revenue, according to Zacks data. The Finance sector alone is projected to post 12.6% earnings growth on 8.4% revenue gains, with Bank of America expected to report a 27% EPS increase and Citigroup 38.8%. Energy sector estimates have roughly doubled since April, joining Tech as a key driver of upward revisions.

The high bar raises the risk of disappointment, but early results offer encouragement. Of the 18 S&P 500 members that have reported through July 10, 88.9% beat EPS estimates and 77.8% beat revenue estimates, with total earnings surging 143.3% from a year ago. Bank of America raised its full-year 2026 S&P 500 EPS forecast to $345 from $335, implying 26% annual growth.

Banks Lead the Reporting Wave

JPMorgan, Wells Fargo, Citigroup and Bank of America kick off the Finance sector's Q2 reporting Tuesday morning. Aggregate industry data suggests the four money-center banks will report their best loan growth in almost three years, according to Zacks. For Wells Fargo, analysts expect 12.3% EPS growth on 4.7% higher revenue, while JPMorgan's EPS is seen rising 11.3%.

Early Results Signal Broad Strength

Beyond banks, the early reporting cohort — concentrated in Consumer and Tech — has delivered a beat rate of 83% on EPS and 72% on revenue, BofA data shows. Cooling inflation added to the favorable backdrop, with June CPI coming in below expectations. The improving macro picture, combined with upward estimate revisions across Energy, Utilities and Finance, suggests the earnings expansion is broadening beyond its Tech-led base.

The Q2 results will test whether the broadening earnings recovery can sustain the S&P 500 at all-time highs. Investors will watch bank earnings this week for clues on loan growth and net interest margins, with the full season's verdict expected by mid-August.

This article is for informational purposes only and does not constitute investment advice.