In the second quarter of 2024, S&P 500 sectors displayed varied performance and responses to earnings reports, with the following key highlights:
Profit Growth
The S&P 500 recorded an overall year-over-year profit growth of 10.8% in Q2 2024, marking the highest growth rate since Q4 2021. Notable sectors, including utilities, information technology, financials, healthcare, and consumer goods, demonstrated double-digit profit growth (FactSet Insight).
Sector Performance
- Information Technology: This sector led the market with a 19.57% year-to-date (YTD) return by the end of Q2 2024. Profit growth was driven by strong demand for AI and cloud computing (The Mather Group).
- Financials: Benefited from rising interest rates, which contributed to significant profit growth.
- Healthcare: Showed strong growth due to high demand for medical services and products, with many companies surpassing profit forecasts.
- Energy: Unlike previous quarters, the energy sector faced challenges, with profit forecasts down 6.2%, driven by declining oil prices and reduced demand (FactSet Insight).
- Materials: Experienced substantial profit declines due to falling commodity prices and weak global demand.
Revenue Growth
The overall revenue growth rate for the S&P 500 in Q2 2024 was 5.2%, slightly below historical averages. This reflects restrained corporate spending and cautious consumer behavior (FactSet Insight).
Outlook for Q3 2024
- Positive Projections: Financials, consumer goods, and information technology sectors received upgraded profit forecasts, supported by positive economic indicators and sustained high demand.
- Negative Projections: Energy and communication services sectors faced downgraded forecasts, reflecting ongoing challenges such as weakened global demand and price pressures.
Despite robust profit growth in Q2 2024, the outlook for Q3 remains mixed. Analysts are exercising caution, particularly in sectors like energy and communication services, where further negative revisions to forecasts are anticipated.
