Energy Earnings Grew 149%, Five Times the Index

Energy Earnings Grew 149%, Five Times the Index

With most of the third quarter reported, S&P 500 earnings are up 31.4% from a year ago, against the 29.1% expected on September 30. By sector, energy leads at 149.4% and information technology follows at 69.2%. The other nine sectors are all below 30%. A large part of this quarter's growth came out of the oil price.

Energy profits run straight off the comparison base. Oil was low in the third quarter of last year, and conflict in the Middle East pushed Brent to around $100 this year, so the same barrels produce a one-and-a-half-fold jump in earnings. That growth needs no new product and no new capacity, only a price that stays high, and it disappears on its own if crude returns to last year's level.

There is another bar nobody mentions. Of the eleven sectors, only communication services was revised down, from 51.5% expected on September 30 to 14.1% delivered. The other ten went up. The market spent this week selling the AI trade, and the group that missed on earnings is the one spending the most.

The headline 31.4% looks healthy. Opened up, it is oil, chips, and one sector stalling.

Source: FactSet third-quarter earnings data (Image: @MikeZaccardi)