S&P 500 on track for highest revenue growth in 3 years, with reports from Deere, Zoom ahead

With nearly all S&P 500 (^GSPC) companies’ third quarter earnings reports logged, the index is tracking for an earnings growth rate of 13.4%, according to FactSet’s John Butters. While 83% of companies have reported a positive earnings surprise, it’s the revenue growth in Q3 that stands out.

Butters notes that S&P 500 companies are reporting the highest revenue growth rate in three years.

If it holds, the S&P 500’s current blended revenue growth rate of 8.4% in Q3 would be the highest mark since Q3 2022, when the index posted a revenue growth rate of 11%.

The Health Care, Financials, and Consumer Discretionary sectors have led the revenue growth trend, with companies such as Cardinal Health (CAH), Morgan Stanley (MS), Ford (F), Amazon (AMZN), and Tesla (TSLA), among many others, contributing significantly.

At the same time, earnings growth has slowed for the tech highfliers that have led the markets.

Now that Nvidia (NVDA), the last of the “Magnificent Seven” companies to report earnings, has issued its quarterly release, Butters writes that the Magnificent Seven reported earnings growth of 18.4% for the third quarter.

That’s the lowest earnings growth rate for this group of stocks (Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon, Meta (META), Tesla, and Nvidia) since Q1 of 2023.

“The weaker performance relative to analyst expectations and the lower earnings growth rate for the ‘Magnificent 7’ companies are mainly due to the negative EPS surprise reported by Meta Platforms ($1.05 vs. $6.72) for Q3,” Butters explained.

“Despite the lower growth rate relative to recent quarters, four of the ‘Magnificent 7’ companies (NVIDIA, Alphabet, Amazon.com, and Microsoft) are among the top seven contributors to earnings growth for the S&P 500 for the third quarter.”