Q25006500 The performance of Q2 earnings of US stocks is impressive! HSBC raises year-end target for the S&P 500 to 6500 points.

After the S&P 500 index delivered a strong second quarter earnings performance, HSBC raised its year-end target for this US stock benchmark index to 6,500 points. Data shows that the earnings per share of the S&P 500 index increased by 12% year-on-year in the second quarter, achieving double-digit percentage growth for the third consecutive quarter. Technology stocks, especially the "Big Seven" US tech giants, drove most of the growth, with earnings per share increasing by about 25%, while earnings per share of non-tech index components grew by 6% year-on-year. In addition, financial stocks also performed well, with earnings per share increasing by 12%. HSBC analysts stated: "Combining better-than-expected second quarter performance with strong earnings momentum in a resilient macro background, we have raised our earnings per share expectations for the S&P 500. We now expect a 12% year-on-year increase in earnings per share for the index in 2025, higher than the previous 9% and above the market's general expectation of 11%." The analysts added that despite actual import tariff levels nearing 19%, the impact of tariffs on company performance remains mild. The S&P 500 index saw a rise in net profit margins in the second quarter, reaching a new high in the past four years. However, sectors related to consumers were squeezed, with profit margins decreasing by about 20 basis points. The analysts pointed out: "Companies facing tariff concerns are mainly concentrated in the consumer staples sector. In the second half of the year, we expect the overall profit margin of the S&P 500 index to remain flat, as the strength of the technology and financial sectors offsets pressure on consumer non-essentials." Artificial Intelligence (AI) remains a driving force. Amazon.com, Inc. (AMZN.US), Alphabet Inc. Class C parent company Alphabet (GOOGL.US), Meta (META.US), and Microsoft Corporation (MSFT.US) have maintained their capital expenditure guidance, with these four companies expected to reach a total capital expenditure of $410 billion in 2026, equivalent to one-third of the total capital expenditure of the S&P 500 index component companies. HSBC analysts stated: "Overall, market concentration is increasing, with the top 10 companies in the S&P 500 index contributing about 32% of profits, 38% of market value, and 44% of market return. However, we believe that these companies as well as the overall balance sheets of the S&P 500 index are strong enough to alleviate related concerns." According to HSBC's view, potential future risks include a rebound in inflation due to tariffs or tight labor supply, while positive factors include the easing of political concerns at GEO Group Inc, resilience in economic growth, and productivity improvements brought about by AI.