Higher earnings bar for US stock market rally

NEW YORK: July 9 Rising optimism over corporate earnings has driven the U.S. stock market to new heights in 2026. The question investors want answered in the coming weeks: can companies deliver on that profit promise?
Estimates for 2026 earnings have soared following a blowout first quarter for U.S. results, which was underpinned by massive spending on the AI infrastructure buildout and a solid economic backdrop.
A more solid earnings picture provides strong fundamental support for stocks, investors say, but the higher estimates could be more challenging for companies to meet and lead to market fallout for any disappointments -- a dynamic that may have been in play this week with strong earnings by Samsung Electronics followed by a selloff in the volatile semiconductor industry.
For the second quarter that just ended, S&P 500 companies are expected to report aggregate earnings growth of 23.4% from a year ago, according to LSEG IBES, which compiles estimates from analysts. That's substantially higher than the 15.2% growth that had been expected for the period when the year began. Projections for the rest of 2026 have also boomed.
'Increased earnings and increased expectations are great for investors because it does drive the market higher,' said Chris Fasciano, chief market strategist at Commonwealth Financial Network. However, he said, 'that certainly raises the bar.' - (Reuters)