Citi data shows the number of S&P 500 stocks seeing big post-earnings swings has been climbing in recent quarters

PepsiCo shares slipped about 3.5% Thursday despite its second quarter earnings beat.

The second-quarter earnings season is off to a volatile start, offering an early test of whether investors' high expectations for corporate profits can hold up.

The early reactions have been mixed. Samsung Electronics' (KR:005930) shares fell 7% Tuesday, even after the company flagged a 19-fold jump in second-quarter operating profit and beat estimates, as investors questioned how long the AI-driven memory-chip boom can last. PepsiCo $(PEP)$shares ended 3.3% lower Thursday despite better-than-expected quarterly revenue, after the company warned of higher commodity costs and reported weaker North American food sales.

But the volatility can also cut both ways. Companies that manage to clear an increasingly high bar are being rewarded with big gains. Take a look at Micron Technology's$(MU)$ shares, which jumped more than 16% on June 25, logging their best post-earnings performance ever, after the memory-chip maker forecast quarterly profit and revenue well above expectations, and said customers had committed $22 billion to lock in memory-chip supplies.

To be sure, this isn't exactly a new development. Over the past couple of years, individual stocks' reactions to earnings reports have been getting more volatile, not less.

"We've seen the market volatile during earnings season for almost two years at this point, pretty consistently," said Mark Hackett, chief market strategist at Nationwide.

The chart below from Citigroup tracks the number of S&P 500 SPX companies each quarter that moved more than 10% in either direction on earnings day. For much of the past decade, that number was relatively low, often around 10 to 20 companies per quarter. Since 2024, however, the count has climbed sharply, with several recent quarters showing more than 30 or 40 companies making such large moves. The tally peaked above 60 during the first-quarter earnings season.

That volatility matters because earnings have been one of the biggest supports for the stock market's rally. Analysts expect S&P 500 earnings per share to grow 23.3% from a year earlier in the second quarter, up from 18.8% expected at the end of March, according to FactSet data. Revenue is expected to grow 12.2%. If those estimates are met, it would mark a second straight quarter of earnings growth above 20%, a seventh straight quarter of double-digit earnings growth and the strongest revenue growth for the index since the second quarter of 2022.

"In our view, such profit strength is why stocks continue to defy the skeptics, grind higher, and look past macro items that have largely been inconsequential to earnings growth," Anthony Saglimbene, chief market strategist at Ameriprise, wrote in a Thursday note.

But great expectations can also make earnings season harder for companies to navigate. Hackett said part of the reason earnings reactions have become more volatile is that valuations are elevated, leaving less room for disappointment.

"You need to wait and see the reports to know if it's justified or not," he said.

Another factor is how the market performs in the six weeks or so heading into earnings, Hackett said. In some recent quarters, stocks rallied into the end of the quarter, then paused while investors waited for results before resuming their climb. This time, the setup looks somewhat different because the S&P 500 has been relatively range-bound since mid-May, he said. That is a reason to stay bullish post-earnings, he noted.

Even so, the bar for second-quarter earnings looks unusually high. Saglimbene noted that analysts usually lower their estimates during a quarter, giving companies a lower hurdle to clear. This time, the opposite happened: the bottom-up S&P 500 earnings estimate rose 3.4% from March 31 through June 30, according to FactSet data. That compares with an average decline of 2% over the past five years and 2.7% over the past 10 years during the same period.

"In our view, the usual cushion companies get from a de-risked estimate intra-quarter doesn't exist heading into this earnings season, similar to the last, which places more weight on execution and forward guidance than on the beat itself," Saglimbene wrote.

In other words, companies may need to do more than simply beat earnings estimates. They may have to show that margins are holding up, guidance remains firm or better than expected, and profit growth is broad enough beyond the biggest technology and AI-linked companies to justify the market's valuation, he noted.

That may explain why investors have been treating companies so differently, said Nationwide's Hackett.

"Even within similar sectors, you'll see some companies rallying and some companies beaten up," he said.

-Frances Yue

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July 10, 2026 07:04 ET (11:04 GMT)

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