If it wasn't for the Finance sector, second quarter earnings season would be a dud. According to Zacks Director of Research Sheraz Mian in his weekly Earnings Outlook article, total earnings for the Finance sector in Q2 are up an impressive +30% year-over-year. But excluding Finance, total earnings for the rest of the S&P 500 companies would be down -2.8%.
So why were earnings in the Finance sector so hot?
These two charts will tell you pretty much everything you need to know:
(Improving credit quality is a good thing, but as a bank, I'd rather have strong loan growth and net interest margin expansion boosting my bottom line than simply taking a lower provision for loan losses... but I digress.)
Mr. Mian also points out in his article that the Finance sector has reclaimed its leadership role in the S&P 500, as it now contributes a higher percentage of earnings than any other sector for the first time since the financial crisis. Finance is expected to account for 19.2% of total S&P 500 earnings in 2013 compared to Technology's 18%.
So does the lack of earnings growth outside of Finance concern you? How about the fact that Finance is once again the largest sector in the S&P 500?
Chime in below.
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