3Q Earnings Season Begins This Week

Market Commentary – October 12, 2026

Third-quarter earnings season is now underway, with the major banks beginning to report results tomorrow. Analysts have been raising their earnings estimates throughout the year, as higher Energy prices have had no significant impact on corporate profits.

According to FactSet, analysts expect S&P 500 earnings to increase nearly 30% year over year for the quarter. Energy, Information Technology, and Communication Services are expected to deliver the strongest earnings growth, with all three sectors also ranking among the leaders in expected revenue growth.

S&P Price-Earnings Ratio For 2027 Is Not Excessive

The S&P 500 is a discounting mechanism that typically looks about six months ahead, putting greater focus on earnings expectations for 2027. According to FactSet, the S&P 500 trades at an estimated 12-month forward P/E ratio of 19.0x, while Bloomberg estimates the index at 18.5x based on year-end 2027 earnings. We believe these are reasonable valuation levels given expectations for strong earnings and revenue growth.

Technology valuations have also come down. According to Bloomberg, the sector trades at 19.2x year-end 2027 earnings. Given that Technology is also expected to deliver some of the market’s strongest earnings and revenue growth, we believe its valuation remains attractive. We can make the case that Tech stocks are cheap, based on the earnings and revenue growth of the sector.