Getting the easy stuff out of the way, the roll from June 30th to July 1 caused the SP 500’s forward 4-quarter estimate (FFQE) to add one quarter with one quarter falling off, so the FFQE is now a sum of Q3 ’26 through Q2 ’27:
- The new FFQE is $371.04 versus last week’s $353.22, or an increase of $17.82, or a sequential increase of 5%;
- The PE ratio on the FFQE is back down towards 20 at 20.17x;
- The SP 500 earnings yield jumps almost back to 5% or the late March ’26 (Iran) highs of 5%, coming in at 4.97%.
These numbers continue to amaze. At least in terms of companies followed by this blog, no notable “needle-movers” are scheduled to report this coming week. The week of July 13th, begins to see the banks / financials report.
The fact is SP 500 earnings are appreciating faster than the benchmark itself, hence the slight PE compression on the benchmark: Q1 ’26 SP 500 EPS grew 24.4% y-o-y, and Q2 ’26 is expected to grow at 24.4% as the numbers indicate today, while the SP 500 was up just 10% YTD through q2 ’26.
SP 500 annual return data:
This could be the 4th consecutive year of the SP 500’s total return being double-digits.
- 2023: +25%
- 2024: +25%
- 2025: +17%
- 2026 YTD: +10% (through 6 months)
Certainly technology and SP 500 earnings growth supports the market appreciation, but it’s unusual to see a streak like this.
The late 1990’s was the greatest of all streaks, i.e. 1995 to 1999, when every year saw the SP 500 appreciate more than 20% per year. This blog post from late December ’25 talks about the so-called “sequencing of returns” pattern (don’t know who came up with that description, but TYPICALLY you get a mid-single-digit year of SP 500 return, to break the pattern.
But so far in ’26, that doesn’t look like it’s happening.
The point being beware of patterns this strong.
SP 500 Earnings Yield (SP EY) Surprise:
Plugging in the quarterly bump into the FFQE, the SP 500 earnings yield ended the week with an SP EY of 4.97%.
Anytime the SP EY gets over 5%, it gets interesting.
Here’s a blog post from late March ’26, noting the SP EY over 5%, which coincided with the Iran-conflict market bottom.
As a market forecasting tool, unlike the March ’26 tick above 5%, the SP EY is not a precise market forecasting tool. More like a shotgun than a rifle.
Just though the SP EY yield this weekend should be noted.
Summary: This blog’s 2026 forecast noted above has been incorrect in a couple of areas, mainly the SP 500 return, and expecting an easier Fed, which has resulted in accounts underperforming somewhat YTD, really mainly due to client’s bank holdings. JP Morgan (JPM), this blog’s largest single holding (which has been the case for years, only returning +2.5% through the first 6 months of ’26. Citigroup (C), this blog’s 9th largest position across all accounts, is up +20.97% YTD in the first half of ’26, but it’s a smaller position than JPM, Charles Schwab, etc.
None of this is advice or a recommendation, but only an opinion. Past performance is no guarantee of future results.
Thanks for reading.