US Corporate Earnings Rally Continues as Q3 Net Profit Estimate Rises 2.2%

Unlike in South Korea, earnings estimates for U.S. companies have moved higher for the third quarter this year, with forecasts for the energy and information technology sectors rising sharply from late June.

Financial data firm FactSet said on October 5 that estimated third-quarter net profit for companies in the S&P 500 stood at $800.8 billion at the end of September. That was up 2.2% from the $783.4 billion projected at the end of June, three months earlier.

The energy sector posted the biggest increase in earnings estimates. Expected third-quarter net profit for the sector rose 19.4% over the period, to $56.1 billion from $47 billion, the largest gain among the index's 11 sectors. The increase reflected a surge in international oil prices as the conflict between the U.S. and Iran continued. Earnings-per-share estimates for refiners including Marathon Petroleum and Valero Energy nearly doubled.

Estimated third-quarter net profit for the IT sector also climbed, rising 5.1% to $259.5 billion from $247 billion. EPS estimates were raised for 61 of the sector's 74 companies, with Nvidia and Micron leading the upward revisions. Third-quarter profit estimates for the financial sector also increased 1.6%, to $123.3 billion at the end of September from $121.3 billion at the end of June.

Reuters said third-quarter earnings for S&P 500 companies are expected to have risen more than 30% from a year earlier, but a sharp rise in interest rates remains the most direct threat to the stock market. Higher rates weigh on equity valuations and increase corporate borrowing costs.

Oh Hyun-a, Hankyung.com reporter 5hyun@hankyung.com