Market Update July 27

By Twickenham Advisors on July 28, 2026

Sources: Twickenham Advisors, Morningstar Direct, Federal Reserve Bank of New York, Federal Reserve Bank of St. Louis, U.S. Department of Treasury, and Ycharts as of July 27, 2026

As of late last week, 27% of companies in the S&P 500 have reported actual results for the second quarter. Of these companies, 86% have reported actual EPS above estimates. In aggregate, companies are reporting earnings that are 39.3% above estimates. The unusually high earnings surprise percentage for the index is mainly due to the unusually large positive EPS surprise reported by Alphabet ($9.11 vs. $2.88) whose year-over-year earnings have surged 295%. Excluding Alphabet, the surprise percentage for the S&P 500 for Q2 2026 would fall to 12.6% from 39.3%.

The blended (combines actual results for companies that have reported and estimated results for companies that have yet to report) earnings growth rate for the second quarter is 37.9% today. If 37.9% is the actual growth rate for the quarter, it will mark the highest earnings growth rate reported by the index since Q3 2021 (40.3%). It will also mark the second consecutive quarter of earnings growth above 20% and the seventh consecutive quarter of double-digit earnings growth for the index. Ten of eleven sectors are reporting year-over-year growth. Seven of these ten sectors are reporting double-digit growth, led by the Energy, Communication Services, Info. Tech., and Materials sectors. Health Care is the only sector reporting a year-over-year decline in earnings. During the upcoming week, 177 S&P 500 companies are scheduled to report results for the second quarter.

The Federal Reserve meets this week amid a frenzy of late speculation that a rate hike might occur (36% chance of a hike). There is not a lot of pressure on the FOMC to hike now – it would be odd, given the better June inflation data. The CPI fell a seasonally adjusted 0.4% in June, bringing the annual rate down to 3.5%. Wall Street had expected a 0.2% monthly decline and 3.8% annual level. The US-Iran conflict has revived the energy shock and pushed up bond yields. The European Central Bank took a “wait and see” approach last week at its July meeting and did not hike rates, after raising rates in early June. It is possible the Fed will adopt a similar approach.

As we always remind our clients, a well-diversified portfolio is the key to compounding wealth over the long term: stay invested and stay diversified!