The S&P 500 Index advanced 2.17 per cent in July. As of July 31, the S&P 500 was up 7.78 per cent year-to-date.

There were six sectors in the S&P 500 Index that delivered positive price returns in July. The leading sectors were technology, utilities, industrials, energy, consumer discretionary and communication services with gains of 5.2 per cent, 4.9 per cent, 3 per cent, 2.8 per cent, 2.6 per cent and 2.3 per cent, respectively.

Among the laggards were health care and consumer staples, which declined 3.4 per cent and 2.5 per cent, respectively.

The top 10 performers in the S&P 500 Index during the month were:

Generac Holding Inc. (GNRC-N), up 36 per centInvesco Ltd. (IVZ-N), up 33 per centNorwegian Cruise Line Holdings Ltd. (NCLH-N), up 26 per centAES Corp. (AES-N), up 25 per centGE Vernova Inc. (GEV-N), up 25 per centPTC Inc. (PTC-Q), up 25 per centAdvanced Micro Devices Inc. (AMD-Q), up 24 per centSynopsys Inc. (SNPS-Q), up 24 per centeBay Inc. (EBAY-Q), up 23 per centTapestry Inc. (TPR-N), up 23 per cent

The second-quarter earnings season has been solid. According to a report from LSEG published on August 6, of the 399 companies in the S&P 500 Index that have reported results so far, 80 per cent have beat the Street’s expectations, 16 per cent have reported earnings below expectations, while 5 per cent have reported earnings in line with expectations. The technology sector is a notable standout with 93 per cent of tech companies beating analysts’ expectations. Overall, earnings growth is expected to rise 12.1 per cent year-over-year in the second quarter.

For the balance of the year, earnings growth forecasts have edged higher. For the third quarter, earnings growth of 8.4 per cent is forecast, up fractionally from 8 per cent expected last month. And, year-over-year earnings growth for the fourth quarter is expected to come in at 7 per cent, up from last month’s 6.3 per cent forecast. Year-over-year earnings growth is now anticipated to come in at 10 per cent in 2025, up from 8.5 per cent forecast last month, jumping to 13.4 per cent in 2026, down slightly from 14 per cent expected last month.

According to LSEG, the forward four quarter price-to-earnings multiple for the S&P 500 sits at 22.3 times, up from 20.5 times as of April 30.

Here’s a look at analysts’ target prices, recommendations, forecast returns and yields for all securities in the S&P 500 grouped by sector and ranked according to their expected price returns (excluding dividend and distribution income). The posted target price for each security is an average of all available target prices from analysts. A target price typically reflects an expected share or unit price 12 months from now based on an analyst’s financial modelling, such as a discounted cash flow or sum-of-the-parts model. Data is as of July 31.

It’s important to note that high target prices, which imply stellar returns that seem unbelievable may be just that – unrealistic. At times, when a stock price falls analysts may maintain their bullish expectations, inflating the forecast return. In addition, an outlier (extreme target price) can skew the average target price, to the upside or downside, particularly when the number of analysts covering a stock is low. Don’t let a huge projected gain lure you into a position – it is critical to look at the company and industry fundamentals.

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