The Weekly Update 10/31/2025™
Barnburner Earnings Season Is Here!
Market valuations, as you know, are primarily driven by the ability to earn profits in the companies of Corporate Americas.
As of 10/28/2025, about 1/3 of the S&P 500 companies have reported earnings and of those, 87% have beaten revenue estimates at an average increases of +9.20%.
In the chart from Zachs Research, annual earnings and revenue growth rates from 2022 to 2027 estimates are looking to continue the upward trend.
In my opinion, even these estimates will be too low. Yardeni Research has full year 2025, S&P 500 earnings estimated at $296.16. My guess is actual will be over $300.00 and possibly $307.00 per share.
Also, note the earnings for each year are growing nearly twice as much as the revenue growth. Technology and A.I. appear to be adding a great deal of productivity and efficiency across the board.
The Cause:
- Federal Reserve interest rate cuts started on 10/29/2025 with a ¼ reduction and talk of two to possibly three or more rate cuts to follow. This is rocket fuel to the capital markets
- I. is still in start up mode and already changing our world in ways most won’t understand for years.
- Per the Federal Reserve, there is still over $7 trillion in cash and short-term securities looking for some place to earn north of 0%.
- The government will open “soon” and this too, believe it or not, is a positive for the economy.
- By the time you read this we could have returned to a productive trading relationship with China.
- Japan’s trading agreement, just announced, is a positive catalyst.
Put these points together, and there are many more I didn’t include, and you have the potential for a strong continuation in the uptrend of valuations for Corporate America. Most likely for year end 2025 but also highly likely to continue throughout 2026.
I did not say market valuations go straight up, and I did not say without volatility, yet the data flow suggests the good old USA has a very bright outlook. Think “Five Year Money” (Read it Here).
I’m interested in your thoughts, comments and observations. Feel welcome to call, email, or stop by the office and say Hi.
Respectfully,
James O. Lunney, CFP®
CERTIFIED FINANCIAL PLANNER™ Professional
*The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. Investing involves risk. Loss, including loss of principal, may occur. No strategy assures success or protects against loss. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
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