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S&P 500 Earnings Outlook Turns Net Negative After 23-Week Streak

Bloomberg2 min read5 sources

Why are Wall Street analysts cutting S&P 500 earnings estimates?

S&P 500 (SPX) earnings revisions turned net negative on Wednesday for the first time in 23 weeks as Citigroup's upgrade index dipped below zero, driven by Fed rate hikes and rising input costs.

Key numbers

Upgrade Streak Ended23 weeksLongest since September 2021; ended week of Sep 18
Citi Earnings Revision IndexNet NegativeFirst sub-zero reading in nearly five years
Fed Funds Rate3.75–4.00%+25bps on Sep 16, first hike since 2023
S&P 500 Forward P/E19.3xAbove five-year average; limited buffer for misses
Full-Year 2026 EPS Growth+30%7th consecutive quarter of double-digit growth expected
Energy Price Surge 2026+24% YoYFastest pace since 2022, World Bank forecast (per [2])

What happened

S&P 500 (SPX) earnings revisions turned net negative on Wednesday for the first time in 23 weeks as Citigroup's upgrade index dipped below zero, driven by Fed rate hikes and rising input costs. The streak was the longest since September 2021, ending what had been growing analyst optimism ahead of Q3 reporting season. The Federal Reserve raised interest rates 25 basis points to a target range of 3.75–4.00% on September 16 — its first hike since 2023 — as input costs for manufacturers climbed 6.3% year-over-year and energy prices surged 24%, their fastest pace since 2022 (per). Consumer staples, consumer discretionaries, materials, and financials saw the most forecast cuts, according to BNP Paribas Wealth Management.

Why it matters

The S&P 500's earnings revision flip is a warning sign that the profit engine driving US stocks near record highs may be losing steam. When more analysts cut than raise estimates, actual reported earnings tend to follow lower within one or two quarters. At a forward price-to-earnings ratio of 19.3x — above the five-year average — the index leaves little room for earnings disappointments heading into Q3 season. Major bank results begin October 13, and any miss against the current consensus of 24% profit growth could push stocks lower.

Who this affects

Marketbearish
Medium impact
Elevated 19.3x forward P/E leaves the S&P 500 vulnerable to estimate cuts.
Companybearish
Medium impact
Consumer staples, materials, and financials face the deepest forecast reductions.
Competitorsneutral
Low impact
Tech and energy sectors still seeing net upgrades, bucking the downtrend.
Industrybearish
Medium impact
US corporate earnings face broad headwinds from rate hikes and cost inflation.

S&P 500 vs Dow Jones, Nasdaq 100, Nikkei 225

S&P 500SPX+13.4%19.3x+30%Net Negative
Nasdaq 100NDX:NASDAQ+14.5%——Mixed
Dow JonesDJI+8.5%———
Nikkei 225N225:JPX+29.2%———

As of 2026-09-21

How we got here

  1. Citi Earnings Revision Index previously net negative; five-year upgrade era eventually begins.

  2. Middle East military conflict erupts, sending Brent crude above $114 per barrel.

  3. Federal Reserve raises rates 25bps to 3.75–4.00%, its first hike since 2023.

  4. Citi Earnings Revision Index dips below zero, snapping 23-week upgrade streak.

  5. Bloomberg reports analysts are now net negative on S&P 500 profit estimates.

What to watch

  • Major bank earnings launch Q3 season; watch for margin guidance and cost commentary.2026-10-13
  • Fed dot plot signals one more 25bps hike in 2026; next meeting decision.Q4 2026
  • Whether Citi ERI deepens further before Q3 reports, signalling larger EPS cuts ahead.2026-10-01

Educational content only. Not investment advice.

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