S&P 500 sales growth is at a nearly 5-year high. Here's what's behind the surge.

By Bill Peters

Energy companies in the S&P 500 have put up a 42.5% revenue gain in the second quarter, powering the index's sales performance

High oil prices have been a boon to energy companies.

While Big Tech companies are driving the S&P 500's profit growth to an abnormally high level this earnings season, energy companies are helping spur what could be the index's highest sales growth in years.

With most second-quarter earnings reports now in the books, sales gains for S&P 500 SPX companies are on track to reach levels not seen since 2021.

To some degree, you can thank high oil prices (CL00) (BRN00) for that.

Collectively, the energy sector XX:SP500.10 has put up a 42.5% sales gain in the second quarter, according to a report from FactSet published on Friday. That sector has logged the highest rate of revenue growth of all S&P 500 sectors tracked by FactSet.

Chevron (CVX), for instance, grew sales by 56% in the second quarter to around $70.1 billion, with profits of around $12.1 billion. Those gains have come as consumers have struggled with higher gas prices.

Across the index at large, S&P 500 revenue is set to grow 15% for the second quarter, when combining sales for companies that have reported quarterly results and estimates for those that haven't reported yet, according to FactSet. If that figure holds, it would be the highest sales growth for the index since the fourth quarter of 2021, when the U.S. economy was reopening from the pandemic.

Revenue-growth rates are expected to come down over the rest of the year, with the FactSet consensus calling for 11.3% growth in the third quarter and 10.9% growth in the fourth quarter.

Profit growth has also been unusually high, in large part due to one-off occurrences.

Last week, Amazon.com (AMZN) reported a 242% increase in its earnings per share for the second quarter - but much of that came from more than $50 billion in paper gains it got primarily from its investment in artificial-intelligence developer Anthropic. A week earlier, Google parent Alphabet (GOOG) (GOOGL) reported a quarterly profit that took a similar swing higher, helped by its investments in Anthropic and SpaceX (SPCX).

So far for the second quarter, S&P 500 companies have notched 50.4% earnings growth in aggregate, when combining estimates and actual results, according to the FactSet report. That would be the highest earnings-growth rate since the second quarter of 2021. Given the sheer size of Amazon and Alphabet, they've played an outsize role in driving profit growth for the S&P 500.

-Bill Peters

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

08-09-26 1000ET