Highest earnings growth in over two decades

What happened: Q2 earnings season saw the highest growth rate in over two decades, with 84% of companies beating EPS estimates. Profit margins widened, and earnings estimate revisions were very optimistic. Deutsche Bank's thematic research head published "The Great 2026 Reset," exploring market implications of the Iran conflict.

Market impact: This earnings growth drives broad market optimism, benefiting cyclical and growth sectors. Tech and consumer discretionary stocks, which led the beat rate, see increased investor demand. However, elevated expectations may pressure stocks if future growth disappoints.

What to watch next: Key upcoming catalysts include Q3 earnings reports from major tech companies (e.g., AAPL on July 28, AMZN on July 30) and economic data releases like the Q2 GDP report on July 29. Additionally, monitor geopolitical developments, particularly the Iran conflict, for potential market impact.