Q3 EPS Growth Accelerates Despite Misses, But the Real Test Is This Week

• Despite some high-profile misses this week, S&P 500^® EPS growth for Q3 2025 accelerated to 9.2%

• All eyes will be on Mag 7 reports this week: Microsoft, Met and Alphabet out on Wednesday, and Apple and Amazon out on Friday

• Potential earnings surprises this week: UnitedHealth, Verizon, Booking Holdings, CVS Health Corp, Fox Corp, Estee Lauder and more

• Peak weeks for the Q3 season run from October 27 - November 14

US stocks were mixed last week as investors digested a heavy slate of corporate earnings that included high-profile disappointments from Tesla and IBM, but ultimately finished higher on Friday due to tamer-than-expected inflation data.

For the week, the S&P 500 and Nasdaq Composite were up slightly more than 1.6%, while the Dow was up 2%. Both the DJIA and S&P 500 hit record levels on Friday. Market sentiment has been shaped by three major factors: the peak of Q3 earnings season, dovish commentary from the Federal Reserve, and anticipation for delayed inflation data which ended up coming in better-than-expected.

The Second Week of Q3 Earnings Season Delivers Mixed Results

After getting started on the right footing with impressive results from big banks two weeks ago, things began to take a turn with reports from regional banks later in the week, and some big tech names last week.

The biggest upsets last week came from Tesla and IBM. While Tesla beat expectations on the top-line, profits fell 37% from the previous year.¹ After the report, the stock dropped 4%. Next up was IBM which beat expectations on the bottom-line, but showed slowing growth in its core cloud software services, as competitors such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP) continue to own the market.² Netflix also didn't have such a rosy report when they released results on Tuesday. Despite the success of "KPop Demon Hunters," the streamer's most watched movie ever with over 325 million views, NFLX still missed earnings estimates due to a one-time tax dispute with Brazilian authorities.³ That miss caused the stock to fall 5% after the report.

On the brighter side, industrials had a better showing. Honeywell reported on Thursday and beat analyst estimates on both the top and bottom-line as a result of strength in its aerospace division.⁴ The stock popped 4% after the report. American Airlines followed in the footsteps of its competitors and reported better-than-expected results due to travel demand, and issued strong Q4 and full year guidance.⁵ And Intel delighted investors by reporting beats on both the top and bottom-line due to AI driven chip demand, propelling shares to gain 3% for the week.⁶

With the addition of those reports, the S&P 500 blended EPS growth rate stands at 9.2%, up from 8.5% the week prior. According to FactSet, this would be the ninth consecutive quarter of growth. Revenues are now anticipated to grow 7.0% YoY, up from an expectation of 6.6% in the week prior.⁷

Jobless Claims Rise as Corporate Restructuring Wave Continues

While the government shutdown has halted most federal labor data, the Department of Labor made state-level data available for Weekly Jobless Claims on Thursday. The Labor Department didn't release their usual weekly report, and hasn't since September 25, but an analysis of the data showed that initial claims increased to about 227,000 in the week ended October 18, showing applications for US unemployment benefits on an upward trend.⁸

Layoffs and restructuring seemed to be a theme of the week as many large US corporations announced workforce reduction plans. Among them, Meta announced its latest round of layoffs, cutting 600 positions from its AI division.9 Rivian Auto announced they would be cutting more than 600 employees due to the recent EV pullback.¹⁰ Target revealed they were cutting 1,800 corporate jobs on Thursday, 1,000 of those are jobs currently held and 800 are open hires. This is the discount retailer's first major layoff in decades.¹¹ By Friday GM reported they had laid off more than 200 employees after raising guidance earlier in the week as they released Q3 earnings.¹² And Amazon, while they didn't announce layoffs, internal documents from the company showed they plan to replace over half-a-million jobs with robots in the next seven years.¹³

Mag 7 Reports On Deck this Week

This week marks the first peak week of the Q3 2025 earnings season, kicking off with results from a slew of Mag 7 names, including Microsoft, Meta, Alphabet, Apple and Amazon. These names are expected to have an outsized impact on growth this quarter. Prior to last week's onslaught of results, the Mag 7 names were expected to see YoY EPS growth of 14.9%, vs. the rest of the 493 companies of the S&P 500 which were only anticipated to grow 6.7%.¹⁴ If they don't perform as expected the overall growth rate could take a hit.

Outlier Earnings Dates This Week

Academic research shows that when a company confirms a quarterly earnings date that is later than when they have historically reported, it's typically a sign that the company will share bad news on their upcoming call, while moving a release date earlier suggests the opposite.¹⁵

This week we get results from a number of large companies on major indexes that have pushed their Q3 2025 earnings dates outside of their historical norms. Fourteen companies within the S&P 500 confirmed outlier earnings dates for this week, seven of which are earlier than usual and therefore have positive DateBreaks Factors*. Those names are Teradyne (TER), PPG Industries (PPG), UnitedHealth Group (UNH), Verizon Communications (VZ), Ameriprise Financial (AMP), Edwards Lifesciences (EW), and Kimberly-Clark Corporation (KMB). The names with positive DateBreak Factors are Xylem (XYL), Regeneron Pharmaceuticals (REGN), Booking Holding (BKNG), CVS Health Corp (CVS), Fox Corp (FOXA), Estee Lauder Companies (EL) and Cardinal Health (CAH).

* Wall Street Horizon DateBreaks Factor: statistical measurement of how an earnings date (confirmed or revised) compares to the reporting company's 5-year trend for the same quarter. Negative means the earnings date is confirmed to be later than historical average while Positive is earlier.

Q3 Earnings Wave

The peak weeks of the Q3 earnings season are expected to fall between October 27 - November 14, with each week expected to see over 2,000 reports. Currently, November 6 is predicted to be the most active day with 1,188 companies anticipated to report. Thus far, only 72% of companies have confirmed their earnings date (out of our universe of 11,000+ global names), so this is subject to change. The remaining dates are estimated based on historical reporting data.

Source: Wall Street Horizon

The Bottom Line

As markets close at record highs, the tamer-than-expected inflation data seems to have overpowered last week's mixed corporate signals and unsettling layoff news. This relief rally, however, now faces its most significant trial. The focus shifts decisively from macroeconomics back to fundamentals as the heart of the 'Magnificent 7'—Microsoft, Alphabet, Amazon, Apple, and Meta—prepare to report. With expectations for this group carrying the weight of the market's overall growth, the coming week will determine if the economy's disinflationary trend is being matched by the corporate strength needed to sustain these new altitudes.

1 Tesla Q3 2025 Earnings Release, October 22, 2025, https://assets-ir.tesla.com
2 IBM Q3 2025 Earnings Release, October 22, 2025, https://www.ibm.com
3 Netflix Q3 2025 Earnings Release, October 21, 2025, https://s22.q4cdn.com
4 Honeywell Q3 2025 Earnings Release, October 23, 2025, https://investor.honeywell.com
5 American Airlines Q3 2025 Earnings Release, October 23, 2025, https://americanairlines.gcs-web.com
6 Intel Q3 2025 Earnings Release, October 23, 2025, https://d1io3yog0oux5.cloudfront.net
7 Intel Q3 2025 Earnings Release, October 23, 2025, https://d1io3yog0oux5.cloudfront.net
8 "US Initial Jobless Claims Rose Last Week, State Data Suggest," Bloomberg, Nazmul Ahasan, October 23, 2025, https://www.bloomberg.com
9 "Meta lays off 600 from 'bloated' AI unit as Wang cements leadership," CNBC, Ashley Capoot and Jonathan Vanian, October 22, 2025, https://www.cnbc.com
10 "Rivian Lays Off More Than 600 Workers Amid EV Pullback," Wall Street Journal, Becky Peterson, October 23, 2025, https://www.wsj.com
11 "Target cuts 1,800 corporate jobs in its first major layoffs in a decade," CNBC, Melissa Repko, October 23, 2025 https://www.cnbc.com
12 "GM lays off more than 200 salaried workers in latest round of job cuts," CNBC, Michael Wayland, October 24, 2025, https://www.cnbc.com
13 "Amazon Plans to Replace More Than Half a Million Jobs With Robots," New York Times, Karen Weise, October 21, 2025, https://www.nytimes.com
14 FactSet Earnings Insight, John Butters, October 17, 2025, https://advantage.factset.com
15 Time Will Tell: Information in the Timing of Scheduled Earnings News, Journal of Financial and Quantitative Analysis, Eric C. So, Travis L. Johnson, Dec, 2018, https://papers.ssrn.com

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