⚡️Market Strategy Flash
July 17, 2026
Corporate management teams are signaling their growing optimism this earnings season. According to FactSet, the S&P 500 “guidance gap” continues to widen in a favorable direction, with an incremental 15 firms issuing positive earnings per share (EPS) pre-announcements for 2Q26, the highest net number since 2Q21 (see the chart below).
More firms have been raising their guidance on future profitability, led by tech
Sources:FactSet, WCG, 7/14/26.Notes:# = Number. NBER = National Bureau of Economic Research. EPS = Earnings per share. The copper arrow indicates an uptrend in technical analysis.
Which sector is leading the charge? As we expected, information technology is pulling the rest of the stock market along for the ride, thereby validating my “tech enablement” thesis. In other words, tech upgrades and positive pre-announcements aren’t just isolated sector wins. Rather, they’re setting a strong foundation for the broader index, as digital efficiencies flow across and down through corporate income statements to better bottom lines.
On Tuesday morning, the spotlight shifted to the “Big Banks,” and the results were decisive. Specifically, revenue growth was broad-based, EPS growth significantly outpaced revenue growth andoperating leveragewas evident. In short, the classic banking equation remains alive and well:
Revenue growth + controlled expenses + lower credit costs + capital market strength = outsized EPS growth
A big week for “Big Banks:” Across-the-board “top-line” beats and robust growth
Sources:Seeking Alpha, WCG, 7/14/26.Notes:B = Billions. Y/Y = Year over year.
Capital market performance – illustrated byGoldman Sachs’outstanding 40% year-over-year (Y/Y) revenue growth and 24% “top-line” beat, as well asJPMorgan’s28% Y/Y revenue growth and $6B “top-line” surprise – isn’t simply a cyclical phenomenon. In my view, banks are no longer just financial intermediaries; they’re transforming into tech-enabled platforms where scalable digital infrastructure allows for higher transaction volumes and deeper client engagement with disciplined headcount and operating cost control (see the table above).
A big week for “Big Banks:” Across-the-board “bottom-line” beats and double-digit growth
Sources:Seeking Alpha, WCG, 7/14/26.Notes:GAAP = Generally Accepted Accounting Principles.
Operating leverageis the bridge between the macroeconomic environment and EPS growth (see the table above):
- Robust capital market performance combined with disciplined expense management
- Strong operating leverage
- Booming earnings, especially fromGS(92% Y/Y) andCitigroup(54% Y/Y).
“Léger’s Law of Dynamic Optimism” states that the path of least resistance remains up for stocks. We’ll compare notes at the end of 2026, but it never ceases to amaze me how the strength of earnings recoveries always seems to catch investors off guard. In the meantime, respect the rally, don’t fear it!
Definitions
TheS&P 500is an index that tracks the stock performance of 500 of the largest companies listed on exchanges in the United States. Indices are unmanaged and cannot be invested in directly.
TheNational Bureau of Economic Research (NBER)defines a recession as a significant decline in economic activity that is spread across the economy and lasts more than a few months. Recessions are the periods between peaks and troughs of the business cycle.
Revenuesare the total amount of money a business brings in through the sale of its goods or services before any expenses are deducted. It is often referred to as the “top line” because it sits at the very top of the income statement.
EPSare financial metrics calculated by dividing a company’s net profit by its total number of outstanding shares of common stock. It indicates how much money a company makes for each share of its stock and is widely used to gauge corporate profitability.
GAAP EPSreflect reported earnings per share.
Normalized EPSreflect company-defined adjusted earnings.
Differences between the two may reflect securities gains/losses, reserve changes, tax items or other non-core items (e.g., JPM).
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Publication Date: July 17, 2026
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