About a month ago, there were concerns about large-cap growth stocks, technology stocks in general and ‘Mag 7’ stocks specifically, being unable to continue their strong earnings growth rates. Alongside those, there were additional concerns about the direction of the general economy, employment, and inflation.

Fortunately, expectations that the technology sector’s earnings’ growth rate to decline are not being seen this quarter. While not all components of the S&P 500 have reported yet, the Technology sector is growing earnings by 21% year over year.

Collectively companies in the S&P 500 are reporting earnings growth rates above the 5 and 10-year averages. Prior to the beginning of the quarter, earnings growth was expected to be around 5%. Earnings are on pace to exceed 11% growth vs a year ago.

The price level of the S&P 500 index has risen by about 2.5% since earnings season began.

On the other hand, general economic growth throughout the economy is still trending slower. Employment growth declined dramatically in May and June as indicated by the monthly Non-Farm Payrolls figures. Slower job growth often coincides with slower wage growth which can decrease consumer spending which makes up over 70% of the US economy. The past 12 months have seen average job growth of 128000 per month, while the 12-month average covering July 2023 to July 2024 averaged 165333 per month.

Another bad jobs report in early September would further tip the scales toward early signs of a recession. How the market may react is anyone’s guess as the very bad report from August 1 saw a mild and brief dip of less than 2%.

Inflation remains tame at an annualized rate at 2.7%, rising from 2.3% in May 2025. Oil’s price decline over the past two years has leveled out, reducing its dis-inflationary effect. Tariffs remain a concern. Goldman Sachs reports that US companies are ‘eating’ 64% of tariff increases, while foreign companies ate 14% and the US consumer absorbed 22%.

If companies continue to absorb the majority of tariffs and inflation from tariffs will remain muted.