The S&P 500 is delivering an earnings season that defies the usual playbook. With second-quarter results rolling in, the index is posting profit growth that would normally follow a deep downturn—yet no such slump has occurred.
Wall Street projects S&P 500 earnings for Q2 2026 will rise 23.6% from a year earlier, according to data compiled by stockwirex.com. That pace of expansion is historically associated with recoveries from recessions or financial crises, not with an economy operating near full employment.
The early read on the quarter supports the upbeat forecast. As of July 17, the second-quarter earnings season is off to a strong start relative to expectations, FactSet noted in its weekly update. The combination of high growth projections and positive early surprises has pushed the index to levels that are stretching traditional valuation yardsticks.
One widely followed measure, the cyclically adjusted price-to-earnings ratio—the Shiller CAPE—stood at 41.37, according to ycharts.com. That reading is well above its long-term average and has only been exceeded during the late-1990s dot-com bubble and the 2021 post-pandemic rally. Elevated earnings are providing fundamental support, but the multiple leaves little room for disappointment.