Finance: Wall Street is shouting for a 'solid encore' from the largest companies in America

Analysts expect a repeat of earnings growth in the second quarter, even if it's not as much as the first.

"According to analyst expectations, there appears to be enough left for a solid encore," said Brian Hayes, an equity strategist at Morgan Stanley.

The first quarter ended a five-period streak of S&P 500 earnings declines that were worsened by the energy sector's turmoil. Analysts expect a repeat of earnings growth, even if it's not by as much.

Companies that have already reported, whose second quarters end in May and not June, are hinting at strong results for the rest of the pack. "So far, 78% of companies have beaten on EPS, 78% have beaten on sales and 70% have beaten on both-the best results we've seen since we began tracking data for the early reporters in 2012," said Savita Subramanian, the head of equity and quant strategy at BAML, in a note on Friday. "This suggests beats could be widespread this quarter."

PepsiCo will on Tuesday kick off the heavy reporting season for the S&P 500, followed by Delta Air Lines on Thursday, and three of the big banks — JP Morgan, Wells Fargo, and Citigroup — on Friday.

Analysts always cut their earnings projections before earnings season, creating a lower bar bar for companies to beat. This time, their estimate cuts were the smallest in three years.

Goldman Sachs pegs the consensus estimate of S&P 500 earnings growth at 7%, about half the Q4 pace.

Although the energy sector is expected to lead year-over-year earnings growth, at 370%, it's an obvious outlier. That's because many results would reflect a rebound in oil prices, so the bar they have to clear to achieve growth is low. Wall Street has also watched oil prices rise, and has likely priced in some of the growth that will be announced.

The real 'winners' among sectors could be tech and financials, which have led the stock market's gains this year. They are estimated to report 10% and 6% earnings growth respectively, according to Goldman Sachs.

Investors will be keen to see earnings-per-share growth after the rally in stock prices this year stretched valuations further. The stakes are higher for tech following a sharp rotation away from the sector and towards others less valued like health care.

Only one sector is expected to decline

Companies with more sales outside the US should put on a better showing than their domestically focused peers, according to RBC Capital Markets.

"Economic projections point to a pickup in nominal GDP on a global basis," said Jonathan Golub, the firm's chief equity strategist. "Given their greater economic sensitivity, non-U.S. companies are forecast to grow faster than those in the U.S. for 2Q and full-year 2017."

Companies with high foreign sales are forecast to grow earnings by 9.1%, about three percentage points more than those with high US sales, according to RBC.

This makes the impact of the dollar on overseas earnings all the more important to watch. According to FactSet, more companies have cited the strong dollar/foreign exchange as having a negative impact than any other factor.

A tight jobs market remains a potential headwind to the consumer discretionary sector because it's labor intensive, and to S&P 500 earnings at large, said David Kostin, Goldman's chief equity strategist. Wage growth remains little changed, as the June jobs report released on Friday showed again. But a 100 basis-point increase in wage inflation would cut annual S&P 500 EPS by about 1%, Kostin estimated.

Consumer discretionary is projected to be the only sector that reports a year-on-year drop in earnings, Goldman's data showed.

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