Information Technology Has Been a Key Driver of Domestic Earnings Over The Last Two Years

Consensus estimates point to 12.50% earnings growth for the S&P 500 Index in 2025, with elevated expectations visible in the information technology, consumer discretionary, and health care sectors. As information technology has been a key driver of domestic earnings over the last two years, the sector has comprised a larger and larger share of overall index earnings. The current level is not necessarily concerning, but the concept bears consideration. Elevated earnings concentration can introduce index-level volatility should estimates change, especially given that the sector in question constitutes 33% of the S&P 500 Index. On the contrary, we see potential for diversification of earnings within the U.S. market. As earnings growth from the “Magnificent 7” tapers, contribution from a broader subset is expected in 2025. Robust earnings growth across a more diversified slate can stoke a more inclusive rally in the domestic equity market. 

 

Watch this 8-minute clip from the Quarterly Edge Report at Blue Chip Partners hosted by the Chief Investment Officer Daniel Dusina, CFA® and Managing Partner Dan Seder, CFA®, CMT, CFP®.  

 

Watch the episode on YouTube by clicking here: https://youtu.be/GQ-2iblCY24

 

  

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