Yahoo S&P سي ثري · AI

Strong Earnings Mask Growing Struggle With Inflation, Oil Prices

Oct 30, 2026 1:30 PM · YahooFinance

(Bloomberg) -- At first glance, the third-quarter earnings season is going great.

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Overall earnings growth for the S&P 500 is tracking above pre-season estimates and 82% of companies have surpassed expectations, with over half of the benchmark's market capitalization having reported.

Energy and technology drove most of those gains, while other industries are flagging under the weight of weakening consumer confidence, rising oil prices and stubborn inflation.

Excluding energy and artificial intelligence-related companies, third-quarter earnings growth across the index halves to 14%, Bloomberg Intelligence data shows.

Though tech and oil giants are driving solid earnings growth this quarter, "the setup is becoming less forgiving as higher fuel costs pressure margins, consumers absorb persistent inflation and estimate-revision momentum slows," BI analysts Wendy Soong and Christopher Cain wrote in a note earlier this month.

That squeeze is already visible with expensive crude weighing on airlines and materials producers, while retailers face cash-strapped shoppers.

Nike Inc. set a grim tone for the consumer discretionary sector, with the stock plunging to a 13-year low on "ugly" guidance that forced the company to embark on a major overhaul.

Hoka-parent Deckers Outdoor Corp. shares also sank as weak demand hurt sales, while MGM Resorts International missed estimates as revelers spent less on the Strip.

In the materials industry, firms like retail packaging company International Paper Co and coatings manufacturer Sherwin-Williams Co are grappling with rising costs and tepid volumes across industrial, construction and consumer end markets.

"The softer-for-longer demand backdrop shows no clear sign of reversing after taking hold last year," BI analysts Sean Gilmartin and Jason F Miner wrote about Sherwin-Williams, noting inflation risks are unlikely to fade until the second half of 2027.

Against that gloomy backdrop, energy, tech and defensive stocks continue to "shine" in both the US and Europe, according to Barclays analyst Magesh Kumar.

But even for those outperformers, momentum is showing signs of a slowdown with "beats stabilizing, margins easing and EPS revisions peaking," Kumar said.