US results preview Q2 2025: tariff turmoil hits growth forecasts
Uncertainty around President Trump’s tariff strategy means few companies have been brave enough to issue near-term guidance. Graeme Evans studies expectations for quarterly results.
8th July 2025 13:08
US President Donald Trump salutes during the US national anthem in Doha, May 2025. Photo by BRENDAN SMIALOWSKI/AFP via Getty Images.
A strong quarter for the S&P 500 index and stocks including JPMorgan Chase & Co (NYSE:JPM) and NVIDIA Corp (NASDAQ:NVDA) has offset diminished expectations heading into next week’s results season.
Financial data group FactSet said Wall Street forecasts point to year-on-year second-quarter earnings growth of 5%, which would be the lowest rate since 4% in the final quarter of 2023.
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The projection on 31 March had been for 9.4% growth in the second quarter, but that was before downward revisions caused by inflation and growth worries linked to President Donald Trump’s “Liberation Day” tariffs.
The earnings outlook for the rest of this year is more positive given that Wall Street expects the third quarter to show earnings growth of 7.3% and then 9.1% across the calendar year.
FactSet points out that the S&P 500 index now trades on a forward 12-month price/earnings (PE) multiple of about 22.2 times, well above the five-year average of 19.9 times and 10-year of 18.4.
It also compares with the 20.2 recorded at the end of the first quarter, driven by an 11% increase in the price of the index against a 1.2% rise in 12-month earnings estimates.
A quarter that began with heavy selling and eye-watering jumps in the Vix index of volatility ended with the leading benchmark back above 6,000 and in record territory.
The recovery was powered by the 60% rebound of Nvidia from April’s post-Liberation Day lows as the semiconductor giant reclaimed its place as Wall Street’s most valuable company. Investors will have to wait until 27 August to find out about its second-quarter performance.
JP Morgan Chase kicks off the banking sector’s results season next Tuesday, alongside figures from Citigroup Inc (NYSE:C) and Wells Fargo & Co (NYSE:WFC).
The sector has rallied by 39% from its post-tariffs low on 8 April, raising the bar ahead of what’s likely to have been a weaker quarter for earnings due to subdued trends in consumer and investment banking.
JP Morgan’s shares today opened at $292, prompting HSBC analysts to switch their recommendation to Reduce from Hold.
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At a sector level, FactSet said the IT and consumer discretionary sectors trade on the highest multiples at 29.2 and 28.5 times respectively whereas energy is the lowest at 15.4.
Energy is one of five sectors projected to report a year-on-year decline in second-quarter earnings. Communication services is seen as posting the highest growth out of the remaining six sectors, boosted by a softer comparative for Warner Bros. Discovery Inc Ordinary Shares - Class A (NASDAQ:WBD).
FactSet adds that analysts project a 7.5% increase in the S&P 500 over the next 12 months, driven by improved performances in healthcare, energy and real estate. Financials and industrials are set to see the smallest price increases.
Out of 12,287 ratings on stocks in the S&P 500, FactSet notes that 56.4% are Buy, 38.7% are Hold and 4.9% are Sell.
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