US stocks rose Monday as third-quarter earnings season approaches, starting Thursday with PepsiCo. Goldman Sachs expects the S&P 500 could again beat forecasts, even as consensus points to slower profit growth than the second quarter.
US stocks traded higher Monday ahead of the third quarter earnings season, which begins Thursday morning with results from PepsiCo. Goldman Sachs analysts said the market gained after a quiet weekend and an in-line ISM Services index reading.
ISM Services data shows mixed signals
The ISM Services index came in at 54.9, down 0.5 points from the previous month but largely matching consensus expectations. The report showed an increase in the employment component but declines in business activity and new orders. The prices paid component rose to its highest level since 2022, pressured by tariffs and energy prices.
Earnings growth set to slow from Q2 pace
Third-quarter 2026 consensus estimates forecast earnings per share growth of 27% for the S&P 500, with the median stock growing EPS by 9%. That marks a slowdown from the second quarter's 33% year-over-year growth in S&P 500 EPS and 14% for the median stock. Still, Goldman Sachs analysts see room for the S&P 500 to outperform expectations again in the third quarter, though EPS growth is unlikely to exceed the second-quarter pace.
PepsiCo and Delta lead the week's reports
PepsiCo reports Thursday morning, with analyst Bonnie Herzog expecting healthy mid-single-digit international revenue growth balanced by slower US growth. Delta Air Lines reports Friday morning, and analyst Catie O'Brien noted that rising jet fuel prices are pushing against price and capacity discipline in the airline industry.
Goldman Sachs also refreshed its Americas Conviction List last week, adding five stocks: Amazon.com, Burlington Stores, Huntington Ingalls Industries, Johnson Controls, and Occidental Petroleum.
Source: Investing.com
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