It’s been a bit since this blog updated it’s SP 500 earnings data.
- As of Friday, 10/16/26, the “forward 4-quarter estimate” for the SP 500 was $404.48. This covers the period Q4 ’26 through Q3 ’27.
- The PE on the forward estimate using Friday, 10/16/26’s SP 500 close of 7,659.44, is 19x.
- The SP 500 “earnings yield” jumped over 5% to 5.28% as of Friday’s close.
- Both in early April ’25 (5.50%, after the tariff-related drop) and late March ’26, (5.05%, from the Iran-related selloff and higher crude oil), each time the SP 500’s earnings yield has closed the week above 5%, the SP 500 has seen a nice rally following the 5% or better close.
- Just 45 companies have reported Q3 ’26 results, so it’s a bit early to draw conclusions, but here’s the expected growth rates by sector (ranked from highest to lowest expected EPS growth) for Q3 ’26:
Q3 ’26 expected EPS growth:
- Energy: +128.3%
- Technology: 66.5% (probably no surprise there)
- Communication Services: +46.1%
- Basic Materials: +31.5%
- Industrials: +18.1%
- Utilities: +6.7%
- Financials: +5.5%
- Real estate +3.9%
- Consumer Staples: +3.7%
- Consumer Discretionary: +3.5%
- Health Care: +1.2% (given it’s positive price action the first week of October ’26, the expected growth rate seems paltry).
- SP 500: Expected +30.7%
Data source: LSEG
Energy will “comp” weak results until Q2 ’27.
The financial and consumer discretionary sectors were a little surprising. Consumer discretionary is homebuilders and home-improvement retail like Home Depot (HD) and Lowe’s (LOW), Nike (NKE), McDonald’s (MCD), Starbucks (SBUX), etc. All of the above stocks are down quite a bit, Nike and McDonald’s being down 51% and 32% respectively. The two biggest companies in consumer discretionary by market cap are Amazon and Tesla.
Sold EMXC:
This blog used to post “Top 10” positions on occasion, since it gives readers and idea what is actually owned and how much is owned, since this blog frequently writes about individual stocks and sectors, but the practice was stopped since the fear it could be considered “marketing”.
The iShares MSCI Emerging Markets ex-China (EMXC) was this blog’s 5th largest position as of September 30th (and 4th largest equity position), but with the exception of some tax-sensitive, brokerage accounts, which prefer capital gains kept to a minimum, the EMXC was mostly sold by Friday morning, October 16th.
While the ETF had an “emerging markets” moniker, the fact is 34% and it’s top three positions by market-cap weighting were Taiwan Semiconductor (TSMC) at 20%, Samsung at 8% and SK Hynix at 6%, with percentiles rounded up or down. With Taiwan and South Korea being “emerging markets” there are a lot of EM managers that are over-weighting Taiwan and South Korea with these three semiconductor stocks, resulting in (what I think at least) is a crowded trade.
Watching the US semiconductor companies the last 2.5 months, like Nvidia (NVDA), Micron (MU) and Sandisk (SNDK), the following has been noted:
- NVDA reported fiscal Q2 ’27 on 8/26 after the bell, with the stock closing at $209.66. NVDA raised revenue guidance for fiscal ’28 (the start of which is still 6 months away), with the stock today closing Friday, 10/16 at $214.
- Micron (MU) reported Sept 30th after the bell, with the stock closing that day at $1,065. Micron earned $8.59 per share in fiscal ’25 and is expected to earn $173 in fiscal ’27 (think about that).The stock closed Friday, 10/16 at $878.
- Sandisk (SNDK) reported August 5th ’26 and closed that night at $1,350 per share. Friday, October 16th, SNDK closed at $1,299 per share.
To be even handed about it, all three of these stocks remain above their 200-day moving averages.
Three semiconductor companies, (technically NVDA is GPU’s but NVDA is listed under the semiconductor sub-sector heading), and only NVDA is up after what was widely-considered pretty strong results.
The expectations are so high for this group, it’s frightening.
Reading some research over this weekend, someone described South Korea’s stock market as the most speculative in the world right now, and it could get even worse.
The proceeds of the EMXC sales will probably be directed (at least partially) to an international or emerging market ETF that doesn’t have a concentrated bet on semi’s, or some other non-correlated US sectors from the above list. International has performed well for clients the last two years, both on an absolute and relative basis, and that includes EMXC.
Summary: The bulls are still bullish and the bears are still bearish, and this blog has tried to have a foot in each camp, with an eye on portfolio returns, but also using opportunities to re-allocate so portfolio construction has some non-correlated aspects to the current 18 – 19 year secular bull market.
This bull could continue higher for a while, too.
The current calendar 2026 SP 500 EPS estimate is expecting $365.70 when the 4th quarter is wrapped up by mid Feb ’27, and then the current LSEG data is expecting $424 for calendar ’27 and $492.62 for calendar ’28.
The SP 500 printed a $208 EPS (actual) in 2021, and is now looking for a near-$500 SP 500 (estimate) by the end of ’28.
One final comment on the semiconductor sector: unfortunately, this advisor and blog were around in the late 1990’s, and watched Micron trade from $1 per share in during the Iraq invasion of Kuwait in August, 1990 to $100 by the end of the decade, and then drop like a stone. In late August, 2000, MU traded at $93 per share, only to drop to $28 by December, 2000. By October, 2002 and early, 2003, the stock was under $10 per share.
The stock never traded above $20 until 2014.
Because of memory’s supply/demand characteristics, the operating leverage in this sector is phenomenal in a bull market, and absolutely horrific in a bear market.
Maybe it will be different this time with MU’s strategic customer agreements, and the fact that many of these management companies saw the last cycle and what happened to the share price, but as readers can tell by the incredible rally in April and May ’26, maybe not that much has changed ?
After an 18 – 19 secular bull market, the preference is to continue to turn the dial towards less volatility, and less (obvious) risk.
None of this is advice or a recommendation, but only an opinion. Past performance is no guarantee of future results. All EPS, revenue and expected growth rates are typically sourced from LSEG. None of this information may be updated and if updated, may not be done in a timely fashion.
Thanks for reading.