According to the information from ZHONGXIN SECURITIES, a research report released by CITIC Securities stated that, based on calculations, the revenue and profit growth rates of the S&amp;P 500 Index in Q2 2024 were 5.1% and 11.0% respectively, showing an increase from the previous quarter. Excluding the &#34;Big Seven&#34; tech companies, the earnings growth rate of component stocks turned positive for the first time after 6 quarters of negative growth, recording 5.6%, which was the main driver of the accelerated performance this quarter. However, the proportion of individual stocks outperforming the market in terms of performance growth decreased this quarter, and the earnings growth of small-cap stocks lagged behind the broader market. In addition, the performance growth and outperformance of most industries this quarter were weaker compared to the previous quarter, indicating a slowdown in the growth momentum of the U.S. stock market. The significant recovery in performance of industries such as healthcare, energy, and materials this quarter was the main factor driving the overall performance growth of the market. Furthermore, CITIC Securities mentioned that during the earnings disclosure period, the annual earnings growth expectations for the U.S. stock market showed a downward trend, mainly due to adjustments in expectations for cyclical industries. If the upstream resource industry is excluded from the statistics, the earnings expectations for the U.S. stock market in 2024 are expected to stabilize and improve during the period, indicating that market confidence remains resilient.
<h2>Key Points from CITIC Securities:</h2>
Accelerated earnings growth of the S&amp;P 500 Index in Q2 2024, but momentum is slowing down.
As of August 29, 2024, 492 component stocks of the S&amp;P 500 have disclosed financial reports for Q2 of the calendar year. Overall, the revenue and profit growth rates were 5.1% and 11.0% respectively, both higher than the previous quarter. After excluding the tech &#34;Big Seven,&#34; the earnings growth rate of component stocks turned positive for the first time after 6 quarters of negative growth, recording 5.6%, which was the main driver of the accelerated performance this quarter. However, the proportion of individual stocks outperforming the market in terms of performance growth decreased this quarter, and the earnings growth of small-cap stocks lagged behind the broader market. Considering the situation of performance exceeding expectations (LSEG smart estimate) this quarter, the growth momentum of the U.S. stock market is slowing down.
Improvement in industries that contracted in the previous quarter, but the growth momentum of most industries is slowing down.
Looking at the primary industries, the main industries that led the overall performance growth of the U.S. stock market in the previous quarter, such as information technology, real estate, communication services, and consumer discretionary, had lower revenue or profit growth rates this quarter compared to the previous quarter. On the other hand, industries that experienced significant contraction in performance in the previous quarter, such as healthcare, energy, and materials, saw significant recovery in performance this quarter. However, the performance growth rates of most industries this quarter were weaker than the previous quarter, and the degree of outperformance was also lower than the previous quarter, indicating signs of a slowdown in the growth momentum of the U.S. stock market.
Performance differentiation in cyclical sectors, with a slowdown in the contraction trend of upstream resource industries and pressure on capital goods and transportation industries. The contraction trend in the energy and materials industries eased slightly, with downstream refining performance pressure easing compared to the previous quarter for the former, and metal companies benefiting from the rise in copper and gold prices, as well as a moderation in the contraction trend of chemical companies, providing support to the performance growth this quarter. However, there was performance differentiation within the industrial sector, with capital goods experiencing contraction, mainly affected by machinery, aerospace defense, and conglomerates, while the performance of aviation companies in the transportation sector was also poor. Nevertheless, business and professional services maintained relatively high performance growth
In the defensive sector, only the food and beverage industry saw negative growth in performance, while other industries achieved positive growth this quarter, but the growth rate of over half of the industries was lower than the previous quarter. Utilities saw a positive revenue growth rate this quarter, but unexpected weather in the United States led to lower-than-expected performance, with profit growth slowing down but still maintaining high growth. Performance in household and personal care products was poor, with beauty products performing better, exceeding overall expectations. Medical equipment and services is the only defensive industry with continued upward profit growth, and performance in specific sub-sectors also exceeded expectations. Essential retail, food and beverage, and tobacco industries saw slower growth compared to the previous quarter, with the latter seeing profit growth turn negative.
In the major financial sector, performance growth declined from the previous quarter, with profit growth declining significantly. Insurance in the financial industry performed well due to rising premiums and increased investment income, while financial services showed strong performance due to market performance and expansion of digital businesses. However, banks performed poorly due to factors such as commercial real estate risks, credit card risks, and credit tightening. REITs and real estate faced profit pressure due to increased vacancy rates, rent concessions, and rising operating costs.
In the growth sector, industries showed differentiated performance, with discretionary consumer goods under pressure while technology and healthcare performed well. In industries such as semiconductors, media and entertainment, and discretionary retail, the &#34;Big Seven&#34; technology companies made significant contributions, but the performance growth of most sub-industries still lagged behind the previous quarter. Semiconductors and media and entertainment industries benefited from AI-driven growth, with strong performance, especially in the latter due to growth in streaming subscriptions. Discretionary retail, excluding tech giants, faced overall profit pressure as consumers became more cautious about large discretionary spending under high loan interest rates. The pharmaceutical and biotechnology industries performed well due to strong demand for weight loss and anti-diabetes drugs. Consumer services showed mixed performance, with strong growth in the travel industry, declining performance in the catering industry due to weak demand, and significant profit decline in the automotive industry due to rising costs and weak demand.
24Y US stock performance growth expectations revised downwards, with the main reason being the downward revision of performance expectations for pro-cyclical industries.
During the performance disclosure period, market expectations for full-year 2024 performance of US stocks gradually decreased. As of August 28, 2024, the revenue growth rate expectation for the S&amp;P 500 was 4.6%, a slight increase of 0.4 percentage points from early June, but the profit growth rate expectation decreased by 0.4 percentage points to 9.9%. The downward revision of profit growth expectations was mainly due to significant underperformance of specific individual stocks, with a stable-to-improving trend in individual stock expectations adjustments, while revenue expectations were relatively poor. Looking at industries, performance expectations were revised downwards for pro-cyclical industries during the period, while expectations for major financial and growth sectors continued to rise. Excluding upstream resources, the performance expectations for 24Y US stocks slightly increased during the period, showing a stable-to-improving trend, indicating continued market confidence. In terms of sub-industries, performance expectations for downstream AI industry chains continued to rise amid high growth expectations, while pro-cyclical sub-industries such as aviation, steel, and oil and gas saw significant declines in performance expectations.
Risk Factors:
<ol>
<li>Unexpected cooling of the US economy; 2) US inflation data exceeding expectations; 3) Overseas central bank monetary easing below expectations; 4) Liquidity risks in the US financial system; 5) Escalation of geopolitical conflicts</li>
</ol>

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CITIC SEC's recent research report pointed out that the revenue and profit growth rates of the S&P 500 Index in the second quarter of 2024 are 5.1% and 11.0% respectively. Although they have increased compared to the previous quarter, the overall performance growth momentum is slowing down. Excluding the "Seven Tech Giants", the component stocks achieved positive profit growth for the first time (5.6%). In terms of industries, healthcare, energy, and raw materials have performed well, but the proportion of individual stocks outperforming expectations has decreased, with the downward revision of performance expectations in cyclical industries being the main reason. Market confidence remains resilient

- The latest report from CITIC Securities reveals that the S&P 500 index saw revenue and profit growth rates of 5.1% and 11.0% in 24Q2, respectively, showing an uptrend from the previous quarter. Despite positive growth, the proportion of individual stocks outperforming the market decreased this quarter compared to the last, indicating a slowdown in overall earnings momentum in the US stock market.
- Key sectors like healthcare, energy, and materials significantly contributed to the overall performance improvement this quarter. However, most industries experienced a slowdown in earnings growth compared to the previous quarter, signaling a deceleration in the US stock market's earnings momentum.
- The report highlights a mixed performance across different industry sectors, with some showing resilience while others face challenges. Factors like sector-specific risks, economic indicators, and geopolitical tensions pose potential risks to the market's stability moving forward.

Zhitong

CITIC SEC

CITIC Securities Co., Ltd.

CITIC Securities Co., Ltd.: Growth momentum of US stock performance in 2024Q2 slows down, with downward revision of performance expectations in pro-cyclical industries being the main reason