S&P 493 Projected to Outpace Magnificent Seven Earnings

Russell Investments projects that the S&P 493 companies will see earnings growth of 27.7% in the third quarter, outpacing the 20.3% growth expected for the Magnificent Seven tech giants. This shift follows a period of extreme market concentration where megacaps like Nvidia Inc. drove the S&P 500 to all-time highs, while 75% of the index constituents ended September in negative territory.

Analysts suggest this broadening of earnings growth may create buying opportunities in undervalued sectors, including healthcare, financials, and small caps. This trend indicates a move away from the market's heavy reliance on hyperscalers. FactSet reports a record number of S&P 500 companies are issuing positive guidance, while B. Riley Wealth Management, Inc. predicts the season will reward previously punished sectors.

The third-quarter earnings season begins on October 8 with reports from PepsiCo and Delta Air Lines.