Asset Management
08/03/2026 Market Strategy
August 03, 2026
Going Through Them Changes – Again
Strong Q2 Earnings Results Sent Large Cap Stocks Higher Last Week
Key Takeaways
- US stocks traded mixed last week as the US and Iran conflagration heated up again. Still, oil prices fell more than 5% on the week on hopes for peace talks. The bond market again sold off, sending the yield on the 10-year Treasury note to 4.74%, its highest level since Jan. 2025.
- The S&P 500 Q2 earnings season continues to exceed analyst expectations. The 306 firms that have reported have seen their profits grow 57% from a year earlier, on back of revenue gains of 15%. Prior to the start of the season, FactSet put bottom-up earnings estimates at 23.6% from a year earlier.
- All 11 sectors are seeing earnings growth, with ten of those at double-digit (or greater) rates. Three sectors are seeing their earnings more than double from a year earlier.
- This week 138 companies of the S&P 500 are slated to report, with just 11 set for the week of Aug. 10 as the season begins to wind down.
- This week brings the first indicators of economic activity in July with the ISM and nonfarm payroll surveys due. A jobs gain of 80,000 is expected per Bloomberg’s survey, with the unemployment rate remaining unchanged at 4.2%.
With 306 companies or 61% of the companies in the S&P 500 having reported Q2 results through last Friday, earnings were up 57% from a year earlier on back of revenue growth of about 15%. Results have been impressive with 86% of companies having beaten earnings expectations according to FactSet.
A silver lining to the over-hanging clouds of recent volatility has been some further reduction in the forward earnings multiple of the S&P 500...
All 11 sectors of the S&P 500 are seeing earnings growth from a year earlier. Three sectors have posted triple-digit earnings growth including energy, consumer discretionary, and communication services. Another six sectors have delivered double-digit earnings growth -- including information technology, materials, financials, health care, utilities, real estate, and industrials. That leaves just one sector, consumer staples (regarded as a highly defensive sector), posting merely single-digit earnings growth. See page 8 of this report for details on Q2 earnings in our Earnings Scorecard.
Results thus far are surprising to the upside: the 57% growth rate reported at this point is more than twice the 23.6% bottom-up growth rate expected by analysts in FactSet’s survey. In addition to these solid reported results, a number of company managers in key sectors have provided positive forward guidance, suggesting that conditions are favorable for further improvement ahead.
This week 138 companies of the S& 500 are scheduled to report results including widely followed names in consumer discretionary, consumer staples, health care, real estate, financials, and information technology.
Indeed, the outlook appears to look “a heck of a lot better than worse” to us, notwithstanding plenty of noise throughout recent weeks raising levels of volatility in the stock, bond, and commodity markets.
From our position on the market radar screen, the day-to-day action in the markets continues to often run contrary to positive fundamentals (both economic and corporate) that remain resilient in offsetting challenges and concerns that have in our view served to give bears, skeptics, and nervous investors opportunity to take some profits without FOMO on some days in what appears to us to be a secular bull market with legs to continue to climb the proverbial wall of worry.
Stocks Are Getting Relatively Cheaper
A silver lining to the over-hanging clouds of recent volatility and selling has been some further reduction in the forward earnings multiple of the S&P 500 which ended last week at 19.7 times the next 12-month earnings estimates. That’s 2.5% below its five-year average forward multiple and 15.5% below the five-year high of 23.3x. See page 11 of this report for details in our weekly update on market valuations across the S&P 500 and the mid-cap and small-cap indices.
Keeping Things in Context
Change and progress are seldom universally welcome when they arrive on the scene. And so it is that concerns surrounding AI seem of late to be near a crescendo level in some corners of the market.
Our view remains that innovation that looks to be transformational such as AI is seldom received with open arms by one and all and instead is often viewed with suspicion and fear and to be oft-predicted to be anything but a booster to productivity, opportunities for business, labor, and the consumer that it could become.
A Reiteration
We noted last week that as much as the world has benefited from technological advances over the centuries, they have never been universally endorsed but rather have usually had diverse constituencies including hard line detractors who often have managed only to delay the progress to come but seldom been able to defeat it. As the saying goes, “the genie never goes back into the bottle” and with technology not only that does it never go back into the bottle but it often morphs to reshape and become more efficient going forward.
From our experience with technology as market professionals, we can’t help but think the efficiencies that are likely to come from AI that will help individuals, corporations, and a myriad of for-profit and non-profit institutions across the sectors, the arts and education helping them manage the mountains of data that are produced in the day-to-day of the world well worth the current growing pains to get there.
When it comes to technology, we coined the phrase, “we’re all on the upgrade cycle whether we like it or not.”
We have found that keeping an open mind, right-sizing expectations, having a sense of context, practicing patience, and investment diversification to be helpful in navigating periods of transition and heightened uncertainties over four decades of market cycles, booms and busts and throughout periods of transformational innovation.
Resilience Remains the Operative Word
A mix of prudent monetary policy, resilient revenues and earnings growth, and resilience in key economic data have helped markets navigate troubled waters since the Great Financial Crisis through the COVID-19 pandemic and so far through the current transitional period that includes a change in Federal Reserve leadership with potential for changes in monetary policy implementation along with AI and the potentially transformational technology it could bring.
Where We Stand
We remain positive on stocks particularly in the US but also from a global perspective as the current conflict in the Middle East moves towards resolution and the economic backdrop shows opportunity to move towards “the next new normal.”
Our favorite sectors of the S&P 500 remain: information technology, communications services, industrials, financials, and consumer discretionary.
We continue to favor GARP (growth at a reasonable price) stocks, and “growthier” value (avoiding value traps) and the weighting of cyclical sectors and stocks over defensives.
We expect the Fed to remain independent under the leadership of its new chairman. We were not surprised by the FOMC rate decision last week as we had expected no change in the Fed’s benchmark rate.
Key to the direction markets will take this week will be the results of 138 companies of the S&P 500 that will report Q2 results across a number of sectors and widely followed names along with key economic data that includes ISM manufacturing and services surveys along with the non-farm payroll report for July.
Name:
John Stoltzfus
Title:Chief Investment Strategist, Oppenheimer Asset Management Inc.
John is one of the most popular faces around Oppenheimer: our clients have come to rely on his market recaps for timely analysis and a confident viewpoint on the road forward. He frequently lends his expertise to CNBC, Bloomberg, Fox Business, and other notable networks.
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