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2Q - The Summer of Earnings · UBS Trending

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  It may be the
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  dog days of summer, but the US stock market isn't taking any time
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  to relax
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  as the second quarter earnings season kicks into full gear.
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  So for the quarter,
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  we're expecting S&P 500 earnings to grow by about 5%.
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  Given resilient economic data that has so far held up
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  despite continued uncertainty around trade policy.
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  Now, 5% does represent a slowdown from previous quarters.
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  So what is driving this change? In our view,
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  the slowdown will be driven by Magnificent 7 earnings growth,
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  which accounts now nearly for a quarter of total S&P 500 profits.
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  However,
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  we don't think that the outlook
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  for these companies is necessarily impaired,
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  as AI deployment and adoption continue to gain traction.
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  Outside of the Magnificent 7 and AI, management
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  teams will likely hit on topics including tariffs.
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  With companies now having a full quarter under their belt
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  to better figure out how to best navigate the new environment.
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  The weaker US dollar,
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  which should provide a slightly positive impact to earnings,
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  and the One Big Beautiful Bill, which does include provisions
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  that should provide a modest boost to S&P 500 cash
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  flows and provides incentives for capital spending.
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  So in the coming weeks,
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  we expect investors will have a better sense of which companies
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  are cruising at altitude
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  and which are starting to hit some turbulence.
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  To learn more about our latest views, please visit ubs.com/cio
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  and I'll be back in about a month to discuss the
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  key takeaways.