How has the performance of the US stock market's second-quarter reports been so far?

As the disclosure of Q2 earnings reports in the U.S. stock market comes to an end, the financial data is outlining the true pulse of the market.

According to the Chase Wind Trading Desk, Goldman Sachs revealed in its latest research report that 327 companies in the S&P 500 have released their earnings, accounting for 69% of the total market capitalization—63% of these companies exceeded earnings expectations, marking a rare high ratio in twenty-five years. However, the market's reaction has been lukewarm, primarily due to the ultra-low expectations caused by previous tariff pressures.

In the second quarter, tech giants continued to lead, with earnings growth more than six times that of other companies, while the wisdom of companies in responding to tariff shadows has become a key variable. This seemingly bright earnings season actually conceals many contrasts and mysteries worth exploring.

Goldman Sachs warns that tariff pressures may marginally increase in the second half of the year, and companies may continue to raise prices to protect profit margins, which could further suppress actual demand. However, positive factors are also evident: companies' ability to respond to tariffs exceeded expectations, fiscal policies may provide a mild boost to earnings in 2026, and the growth inertia of large tech stocks may support earnings resilience.

The proportion of exceeding expectations reaches a twenty-five-year high, but "inflation" cannot be ignored

From an overall performance perspective, the "report card" for Q2 is quite impressive.

As of August 1, 327 companies in the S&P 500 have disclosed their Q2 earnings, accounting for 69% of the total market capitalization. Among them, 63% of companies reported earnings per share (EPS) exceeding analyst consensus expectations, this ratio is one of the highest levels in twenty-five years, only lower than during the economic reopening phase post-pandemic.

Earnings growth momentum also exceeded expectations. The S&P 500's Q2 EPS grew by 9% year-on-year, significantly higher than the 4% expected by analysts at the beginning of the quarter. This growth was driven by both revenue and profit margins: the average EPS exceeded expectations by 8%, and average revenue exceeded expectations by 3%, indicating that companies performed well in both revenue generation and cost control.

However, this "high exceedance rate" exists in a special context. At the beginning of this year, analysts significantly lowered their earnings forecasts, creating a "low expectation threshold."

Goldman Sachs pointed out that this dynamic of prior expectation adjustments has discounted the value of "exceeding expectations" in the Q2 reports—the market's reaction to earnings exceeding expectations has clearly weakened: the stock prices of companies that exceeded expectations only outperformed the S&P by 55 basis points after disclosure, far below the historical median of 101 basis points; while companies that fell short of expectations performed even worse, underperforming by 362 basis points, nearly double the historical average.

Corporate guidance turns positive, earnings expectation revisions reach a recent high

In contrast to the caution seen in Q1, corporate guidance for full-year earnings in Q2 has clearly turned optimistic.

Data shows that 56% of companies providing full-year EPS guidance have raised their expectations, nearly double the proportion in Q1 (29%); while the percentage of companies maintaining their guidance unchanged dropped from 54% in Q1 to 27%, indicating an increased certainty in companies' subsequent operations.

The rebound in corporate confidence has also driven revisions in analyst expectations. The "earnings revision breadth" (the number of companies raising expectations minus the number of companies lowering expectations divided by the total number of companies) has surged to its highest level since the end of 2021, echoing the recent rise in U.S. stock pricesThis means that analysts are collectively raising their forecasts for future earnings.

However, it is important to note that the consensus expectations for EPS in 2025 and 2026 are still about 3% lower than at the beginning of the year. Goldman Sachs believes this reflects that concerns about long-term profitability have not completely dissipated since the implementation of tariff policies at the beginning of the year, and the short-term expectation recovery has not fully covered long-term uncertainties.

Signals of Easing Tariff Pressure Emerge, Corporate Response Strategies Diverge

The impact of tariffs on corporate profitability is one of the core topics of the second quarter earnings reports.

The report points out that feedback from earnings call meetings indicates that companies' confidence in mitigating tariff impacts has significantly increased: among companies discussing tariff impacts, 27% explicitly stated that the drag on profits from tariffs will be less than previously expected. Some companies mentioned that the actual tariff rates this year have been lower than the plans announced at the beginning of the year, which is an important reason for the improvement in expectations.

Corporate strategies to cope with tariffs are showing diversification: 76% of companies mentioned alleviating pressure through supply chain restructuring (such as adjusting suppliers and optimizing logistics), 60% chose to raise prices to transfer costs, and 51% hedged by cutting other costs.

Among them, the popularity of the "price increase" strategy aligns with the judgment of Goldman Sachs economists — the transmission of tariff costs to end prices may push up inflation in the coming months, but this also poses a downside risk to the actual revenue growth of companies (excluding price factors).

Large Tech Stocks Stand Out, Growth Gap Widens

The most notable highlight of the second quarter earnings reports remains the growth resilience of large tech stocks.

Although NVIDIA will not disclose its earnings report until August 27, incorporating market expectations for it, the EPS of the Magnificent Seven in the second quarter grew by 26% year-on-year; while the EPS of the other 493 companies in the S&P 500 grew by only 4%, a gap of 22 percentage points, far exceeding the market's initial expectation of 14 percentage points.

This "divergence" is not a short-term phenomenon. Historical data shows that the earnings growth rate of large tech stocks has consistently led since 2024, and their weight in S&P 500 earnings has been continuously increasing. Goldman Sachs believes that this group remains the core driving force supporting index earnings and is a key variable for future upward revisions of earnings expectations.

What is worth paying attention to in the future is the earnings report disclosures for the remaining time in August, especially the performance of tech giants like NVIDIA, as well as companies' latest assessments of the impact of tariffs in the third quarter — all of which will influence the next direction of U.S. stock earnings expectations