Strategists at Morgan Stanley expect increased gains in US stocks during the second-quarter earnings season, supported by strong earnings from companies outside the tech giants.

The bank confirmed that about half of the companies in the S&P 1500 Composite Index are reporting earnings per share growth exceeding 10%, the best performance since the post-pandemic recovery.

Estimates also point to a 23% rise in earnings for S&P 500 companies, alongside improving earnings expectations for the consumer discretionary and transportation sectors, according to data from Bloomberg Intelligence.

However, attention remains focused on the results of tech companies and spending on AI infrastructure, to assess whether earnings growth can justify high valuations, particularly in the semiconductor sector.

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