Positive signals as U.S. stocks pull back: Over 75% of S&P components have seen profit growth, reaching a four-year high.

Notice that, as the S&P 500 index heads towards its worst week since October, US stock investors still have a reason to cheer: the proportion of companies reporting quarterly profit growth has reached a new high in over four years. Data shows that among the S&P 500 index component stocks that have reported earnings, over 75% of companies have recorded profit growth compared to the same period last year. This is the highest ratio since the third quarter of 2021. These figures may alleviate concerns in the market that US corporate profit growth is being driven solely by a few tech giants. The so-called "Big Seven" tech stocks have seen an astonishing 310% surge since the end of 2022, leading to concerns that the US stock market may be heading towards a bubble. The proportion of profit growth in S&P 500 index component stocks is at its highest since 2021 This week, as investors question the returns on massive investments in the artificial intelligence field, tech stocks have led the decline, exacerbating these concerns. Worries over industries vulnerable to AI disruption and volatile precious metal prices have contributed to a 2% drop in the S&P 500 index, expected to be the largest weekly decline since October 10th. Meanwhile, confidence in a broader range of sectors is increasing. Equal-weighted indices like the S&P 500 (which minimizes the impact of tech volatility) have risen by 3.5% this year, outperforming market-cap-weighted benchmark indices. The latest earnings reports indicate that sectors including industrials, consumer goods, and healthcare are now starting to drive index returns. Investors anticipate that this trend will continue to expand. Guy Miller, Chief Strategist at Zurich Insurance, stated: "Growth is becoming more robust, which means profitability is also becoming more widespread. What we're seeing is that you don't have to invest exclusively in tech companies." Among non-tech players, standout performers include General Motors, whose shares surged 9% after announcing strong earnings prospects. Procter & Gamble, which produces a range of products from toilet paper to skincare, also benefited from signs of a recovery in US sales. The gap in profits between large tech companies and other component stocks of the S&P 500 index is expected to narrow Strategists including those from JPMorgan and Goldman Sachs expect that, buoyed by strong economic growth prospects, the trend of expanding profitability will continue in the coming months and further drive company profit growth. Ben Snider, a strategist at Goldman Sachs, wrote in a recent report: "Strong and accelerating economic growth pace into the first half of 2026, relative to the market giants, can create more immediate positive factors for small-cap and more cyclical stocks." Analysts also predict that the profit gap between the seven largest tech stocks in the S&P 500 index and the remaining 493 companies will narrow in the remaining months of this year. Tracked data shows that after a 28% surge in profits last year, the "Big Seven" are expected to see an 18% profit growth in 2026. On the other hand, profit growth for the rest of the index's component stocks is projected to accelerate from 8% in 2025 to 12% this year.