▪  BY JACOB RADKE

Earnings grew in ten of eleven sectors

S&P 500 earnings grew 52% in the second quarter, the fastest rate since 2021.

Ten of eleven sectors grew. Energy led at 146.3%, Communication Services rose 116.9%, and Consumer Discretionary 92.4%, while Health Care fell 6.5%.

The two big storylines are geopolitics and data center construction.

Oil averaged $92.55 a barrel in the quarter against $63.68 a year ago, a 45% increase. Which meant that oil refiners captured the widest profit margins of the cycle, with refining earnings rising 327%, and Chevron posting its best profit in six years.

The second is construction, capital spending by the largest data center operators is approaching $750 billion this year, up from under $450 billion, with 23 gigawatts of capacity being built. Nvidia and Micron sell into that investment. Semiconductor earnings rose 142% with Micron alone earning $28 billion in the quarter against $1.9 billion a year ago.

Earnings are what drive stock market returns over time. The S&P 500 gained 18.6% over the past year, while the earnings grew 52%, that's not a sign of a frothy market.