The earnings bar is high and Wall Street thinks it gets cleared anyway -- a look at the week ahead

Earnings season is set to start with banks next week, and Wall Street is bracing for a potentially difficult but “cleared” slate after an unusual first half. The S&P 500 followed a Q2 average of 7,499, nearly 15% above the Q1 average, while WTI averaged $92.99 as Strait of Hormuz closure boosted oil volatility. Scotiabank’s Q2 preview points to S&P 500 EPS of $81.21, a record high and +23% year over year, with Technology still rising strongly. Expected y/y growth is broad, with Energy up 122%, Tech up 61%, and Materials up 35%, while Health Care is the only expected contraction (-8.7%). Key watch items include AI-related earnings commentary and margins, with consensus margins at 14.85% versus Q1’s 15.4%.