Q3 earnings are still looking very healthy now that 30% of the S&P 500 index has reported results. 26 megacaps (over $100 billion market cap) reported results this week. 81% beat earnings estimates and 88% beat sales estimates. Earnings came in above estimates by an average of 48% (skewed by Intels +1050% EPS beat), while sales came in above estimates by an average of 3.7%.

The interesting thing to note about this week is that the 2 big tech companies that reported (netflix and tesla) both came in below their EPS estimates. Tesla wasn’t surprising, since they’ve been missing EPS estimates for most of the last few years (although sales came in much better), and the Netflix miss can be explained away as a one time event. The point is that the earnings beats/growth is broad based and not the result of only a handful of companies.

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Q3 earnings results for S&P 500 companies are now 8.2% above initial estimates. This marks the best quarter for earnings beats in the last 4+ years.

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And its not just earnings that are beating estimates, sales have come in above estimates by an above average amount in Q2 & Q3 so far. We haven’t seen these type of beats in years as well.

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The 10 year remains below 4.0% for now, making earnings worth more…

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While the USD remains down about 10% for the year, which boosts profits for multinational companies that convert those overseas earnings back to USD. It appears that the USD may be carving out a bottom, but it remains below last years low (blue dashed line) for now.

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Solid earnings combined with lower rates and USD makes it not very surprising to see the S&P 500 price index make another new record high today. At 6881.5 (red line on above chart) would make equate to a 17% price return (not including dividends) on the S&P 500 for 2025.

I highlight this because the average price return for years that the market finishes positive is indeed 17%. If you’re looking for a place to take some profits, that may be an area to do so. Although seasonality is pretty strong from now into years end.

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November and December have historically been the strongest months, finishing positive over 70% of the time. And the last 10 years, November has finished positive 90% of the time, with the highest average return of all 12 months.

Next week will be the most important week for Q3 earnings. By my count there will be 28 S&P 500 companies with a market cap over $100 billion that will report results. And that includes many of the most important tech names such as Microsoft, Alphabet, META, Apple, Amazon, and Visa.

We’ll also have an FOMC statement & press conference on Wednesday.

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