Analysis of recent S&P 500 Q2 earnings shows market is punishing negative EPS surprises more than average.

NEW YORK, Sept. 9, 2024 /PRNewswire/ -- In the second quarter of 2024, we observed a subtle but notable shift in market reactions to post-earnings reports among S&P 500 companies, with stock movements increasingly driven by positive EPS surprises relative to Street consensus and revised EPS guidance, despite fewer companies achieving smaller revenue beats over consensus.

With Street consensus already modeling an acceleration in revenue growth for the second half of the year, there is a heightened bar for companies to clear, especially as revenue growth surprises have shown a tendency to decelerate following previous rate cut periods. Moreover, the slight uptick in share price reactions post-rate cuts, coupled with deeper revenue misses in certain sectors, suggests that investors could soon recalibrate their expectations.

This recalibration could therefore lead to greater scrutiny of top-line performance as the year progresses, emphasizing that rate cuts alone may ...