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S&P 500 Earnings Season Kicks Off: Why Analysts Call This Quarter 'A Stock Picker's Paradise'

As the third-quarter earnings season for the S&P 500 begins, investors are bracing for a wave of corporate results that will offer a window into how well companies are behaving in a complex economic and geopolitical environment.

Bank of America analysts Ohsung Kwon, and Savita Subramanian suggest that, while expectations for earnings growth are relatively subdued, there could still be significant opportunities for stock pickers.

Stock Picker’s Paradise: Volatility Ahead

One of the most notable takeaways from the latest Bank of America earnings preview is the potential for significant volatility at the single-stock level.

The options market has been pricing in the largest average post-earnings implied moves for individual stocks since 2021, suggesting that certain companies could see outsized price swings following their earnings releases.

On the other hand, “implied volatility on the S&P 500 at the index level remains relatively low, which suggests the real action is going to be at the single stock level rather than at the index level this earnings season. It could be a stock picker’s paradise,” analysts wrote.

Earnings Growth Expected To Slow

The consensus among analysts is that S&P 500 earnings will grow by 4% year-over-year in the third quarter, marking a sharp deceleration from the 11% annual growth reported in the second quarter. This slowdown would represent the ...