The start of Q3 earnings season is just around the corner, and it looks like it’s going to be a good one. Not only are there expectations for the S&P 500 Nysearca: Spy Earnings growth and sequential acceleration are set to follow, but the outlook is also improving, providing a lift to market spirits.
As of early October, Consensus for the year It is for earnings to grow 8.0%, 80-BASIS improving from the lows of the review cycle, and the outlook for the following year is also improving.
Three sectors set the pace for third-quarter earnings growth — and could push the index’s gains into the fourth quarter. Technology, energy and financials are leading the charge, supported by strong forecasts and key macro indicators. But with high expectations, even solid results can lead to volatility. In a market at a strength price, the risk of downside on “good enough” profits remains.
AI trading continues to gain momentum
SELECT SECTOR SPDR FUND TECHNOLOGY TODAY
Select Sector SPDR FUND technology
As of 10/7/2025 04:10 PM
- 52 week range
- $172.45
▼
$289.50
- Dividend yield
- 0.53%
- Assets under management
- $92.26 billion
Review trends reveal that AI commerce is alive And healthy and gaining momentum in the fourth quarter. The consensus figure for the technology sector NYSEARCA:XLK Earnings growth is not only stronger by 21%, But the reviews are also the warmest. Consensus is up around 550 basis points since cycle low and likely to continue higher.
The primary driver is nvidia Nasdaq: NVDAwhich has seen 95% of its analysts increase their earnings estimates over the previous 90 days, is expected to grow its earnings by another 50% or more. It is also driving expectations in the technology sector Microsoft Nasdaq: MSFTand apple Nasdaq: AAPLand broadcom Nasdaq: Avgoand oracle NYSE:ORCLwho are also analysts Raising earnings estimates. Collectively, including NVIDIA, they represent 50% of the IT sector and a similarly large portion of the S&P 500.
The XLK is trending higher from the peak reporting season, and will likely continue to advance as the year progresses. However, investors may exercise caution due to the advanced nature of the rally. The market has increased more than 55% since the last major correction, so it could pull back at any time. Additionally, divergence in the MACD indicates that the rally has weakened, increasing the stock price for potential gains and consolidation that could begin soon, regardless of the strength of Q3 earnings.
Utilities: AI is electrifying growth
Selected utilities fund SPDR SECTOR SPDR today
SELECT SPDR SPDR facilities
As of 10/7/2025 04:10 PM
- 52 week range
- $71.02
▼
$90.57
- Dividend yield
- 2.55%
- Assets under management
- $21.77 billion
AI companies are increasing energy consumption daily, driving global electricity demand. At the same time, EV demand is growing, and utilities are investing in modernization and infrastructure to support it. The key takeaway is that the rate base is growing for this sector while rates are increasing, providing a lever for growth.
Influencing earnings expectations is the utilities sector NYSEARCA:XLU expected to be published Second most growth This reporting cycle, estimates are rising. Above 225 basis points since the start of Q3, the consensus figure for the utilities sector is +18%, led by companies including Taqa Constellation Nasdaq: CEG. Its earnings are expected to grow by more than 15% with nearly 60% of its analysts having raised their target during the reporting period.
The Utilities Sector ETF is also trending, hitting new highs in early October. The move is likely to continue, driven by strong earnings and capital returns; However, investors should remain cautious. Technical conditions, including the MACD divergence and stochastics seen, indicate that this market could pull back at any time.
Double tailwinds for financial stocks
Financial Select Sector SPDR Fund today
Financial Select Sector SPDR FUND
As of 10/7/2025 04:10 PM
- 52 week range
- $42.21
▼
$54.49
- Dividend yield
- 1.36%
- Assets under management
- $53.77 billion
Financial sector Nysearch: XLF It is expected to grow 11.5% in the third quarter, driven by continued NII strength linked to higher interest rates and consumer resilience. Expectations for the sector are also rising, with consensus up 400 basis points from its low at the start of the period.
Leading stocks in this group include Berkshire Hathaway NYSE:BRK.A And JPMorgan NYSE:JPMwhich is well suited to benefit from the application of artificial intelligence. On the one hand, Berkshire is a huge insurance company that uses AI analysis and automation across its network. On the other hand, JPMorgan is the world’s largest financial institution outside China, and plans to become the first AI-assisted bank globally.
The XLF ETF is also trending higher, on the cusp of a move that is expected to be spurred by upcoming earnings reports. The likely outcome is a move higher, but again, this is a market Shows some signs of weakness This could lead to a price correction or extended consolidation if the results fail to convince the market.
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