Energy Powers Q1 S&P 500 Earnings Growth

Apr. 17, 2017 8:02 PM ETIVV, XLB, XLE, XLF, XLI, XLK, XLY, SPY
Michael Krause profile picture
Michael Krause


  • S&P 500 (SPY) profit likely grew 11% in Q1.
  • Energy was largest contributor to profit growth.
  • Consumer discretionary has slowed dramatically.

Energy is likely to have been the biggest contributor to overall S&P 500 (SPY, IVV) earnings growth in Q1, the first time that sector has made any significant contribution since the downturn in oil prices several years ago. That's one of several bright spots in our analysis of earnings expectations as Q1 reporting season gets under way (we've used actual results in place of consensus estimates for the few firms that have already reported).

Overall S&P 500 profits are forecasted to have grown by about $25 billion or 11% versus Q1 2016 on an apples-to-apples basis. This is a number that will likely rise a few percentage points as earnings season progresses and companies play the "beat expectations" game. Figure 1 shows the contribution of each sector to overall index earnings growth, along with the ticker symbols for the relevant Select Sector SPDR ETFs.

Figure 1: 1Q17 S&P 500 Profit Growth by Sector

in $mns and % year-on-year

Source: FactSet and ETF Research Center

Energy (XLE) was likely the biggest contributor to S&P profit growth at about $8.9 billion, which is a reversal of a small loss in the same quarter last year. Most of the rest of profit growth came from the Financials (XLF) and Technology (XLK) sectors, both of which saw double-digit increases. Only one sector, Industrials (XLI), likely saw a decline in earnings, with roughly two-thirds of the drag coming from Delta Air Lines (DAL) and American Airlines Group (AAL).

Materials (XLB), though a small sector that won't have a big impact on S&P 500 earnings either way, deserves an honorable mention for its nearly 14% earnings growth. Recently, raw materials-related firms have benefited from numerous analyst upgrades, and that's true for firms in XLB as well.

Meanwhile profit growth for firms in

This article was written by

Michael Krause profile picture
Mr. Krause founded AltaVista Research in early 2004 specializing in the analysis of Exchange Traded Funds (ETFs). AltaVista has grown into a FinTech firm providing data, software and research reports to broker/dealers, issuers, financial advisors and research shops covering both equity and fixed income products. The firm's fundamentally-driven approach draws heavily on Mr. Krause's years of experience prior to founding AltaVista as an investment analyst at major buy- and sell-side institutions. Having lived and worked in Asia for six years, he speaks Japanese and Chinese. He is also a frequent contributor to broadcast and print media, an avid traveler and lousy golfer. Visit AltaVista's site: ETF Research Center (

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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