Rotation Or Correction Ahead In Response To Earnings Season?

The Q2-2026 earnings reporting season begins next week. The major banks will report at the end of next week. We expect they will beat expectations by reducing their bad-loan provisions. In addition, loan demand has been growing faster in recent weeks, and the IPO calendar has been busy.

The big risk up ahead is that technology companies, especially the hyperscalers, won't beat analysts' overly optimistic earnings growth estimates for the quarter. That could cause a correction among technology stocks. The overall stock market might dodge a correction if investors rotate into sectors that have lagged and report better-than-expected earnings. We are in the rotation camp for the stock market's outlook up ahead.