S&P 500's Other 493 Companies Drive Earnings to 5-Year High
0h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
S&P 500earnings growth
Fazen Markets Editorial Desk
Collective editorial team · methodology
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Institutional-grade data shows profit growth for the S&P 500 has accelerated to its fastest pace in nearly five years. MarketWatch identified that the index’s expansion is no longer reliant solely on the Magnificent 7 technology giants. For the first time in years, the other 493 companies in the benchmark are providing significant earnings momentum, marking a decisive broadening of market leadership. The shift was noted in a report published on 25 May 2026, as Intel traded at $119.84, up 0.74%, and the index itself was near all-time highs.
Narrow leadership poses significant risks for overall market health. The last time the S&P 500 saw such a rapid earnings pace was in the third quarter of 2021, driven by post-pandemic reopening demand. This new acceleration follows a three-year period where the largest technology firms anchored nearly all profit growth, a concentration that historically precedes periods of volatility when leadership inevitably rotates.
The current macro backdrop is characterized by moderated inflation and stable, though elevated, interest rates. This environment allows companies outside the mega-cap tech sphere to plan and invest with greater certainty. The primary catalyst for the broadening earnings contribution is a stabilization in input costs and resilient consumer demand across multiple sectors, not just discretionary technology spending. Businesses like industrials, financials, and consumer staples are now seeing improved operational use.
Concrete data illustrates the shift in earnings contribution. Analysts project that for the most recent quarter, earnings for the S&P 500 ex-Magnificent 7 grew by over 9% year-over-year. This significantly outpaces the average growth rate of just 2% seen throughout much of the 2023-2025 period when the tech giants dominated. The improvement is widespread: industrials, financials, and healthcare sectors have all reported double-digit earnings beats at rates not seen since early 2022.
A comparison of earnings contribution tells a clear story.| Period | Magnificent 7 Contribution | Other 493 Contribution |
|--------|----------------------------|------------------------|
| 2023-2025 Avg. | ~85% | ~15% |
| Q1/Q2 2026 | ~55% | ~45% |
The data shows the 493's contribution has tripled from its recent average. This broadening is occurring as the broader index trades near record levels, with Intel as a bellwether, reaching a daily range between $118.09 and $122.78 as of mid-afternoon UTC today. The semiconductor firm's performance, while modestly positive, mirrors the steadier gains across the wider market.
The second-order effects of this broadening are significant. Sector ETFs tracking industrials (XLI), financials (XLF), and materials (XLB) have seen consistent fund inflows over the past quarter, indicating institutional repositioning. Companies with heavy domestic revenue exposure are benefiting from stable U.S. economic data, while globally-oriented industrials gain from a weaker U.S. dollar. Specific tickers in the industrials space, such as Caterpillar (CAT) and Deere (DE), have seen earnings revisions move sharply higher.
A key limitation is that this shift remains early-stage and could reverse if macroeconomic conditions deteriorate rapidly. A re-acceleration of inflation forcing the Federal Reserve to hike rates would disproportionately pressure the more indebted, cyclical companies now contributing to growth. The counter-argument is that any future Federal Reserve easing would provide an even greater tailwind to these same sectors, amplifying the broadening trend.
Positioning data shows hedge funds have been covering short positions in mid-cap stocks while maintaining core longs in mega-cap tech, creating a more balanced portfolio. Retail flow into broad-market index funds has accelerated, a sign of growing confidence in the health of the overall market, not just a handful of names. You can explore more on market breadth indicators at https://fazen.markets/en.
Two immediate catalysts will test the durability of this earnings broadening. The next Federal Open Market Committee meeting on 17 June 2026 will provide critical guidance on the path of interest rates, a primary input for financial and industrial sector valuations. Secondly, the upcoming Q2 2026 earnings season, commencing in mid-July, will confirm whether the 9%+ growth rate for the ex-Magnificent 7 cohort is sustainable or a one-quarter phenomenon.
Key levels to watch include the yield on the 10-year Treasury note; a sustained move above 4.5% could pressure valuations for the newly contributing cyclical sectors. For the S&P 500 itself, a decisive break and close above 5,800 would likely require continued participation from the 493, not just the top seven holdings. Monitoring the relative performance of the equal-weight S&P 500 ETF (RSP) versus the standard cap-weighted SPY offers a clean read on this trend.
For an investor in a standard S&P 500 index fund, a broadening earnings base reduces concentration risk. It means the fund's performance is less dependent on the fortunes of just seven companies. Historically, periods of broad participation have led to more sustainable bull markets with lower volatility. This environment typically benefits passive strategies, as active managers find it harder to outperform when many sectors are contributing to gains.
At nearly a 5-year high, the current earnings growth rate is strong but not at bubble-era extremes. During the peak of the dot-com bubble in 2000, earnings growth was volatile and ultimately collapsed. The 2021 post-pandemic surge was sharper but shorter-lived. The current pace, if driven by a wide base of companies, mirrors healthier mid-cycle expansions like those seen in 2014 and 2017, which were followed by further market gains.
Three sectors are showing standout performance. Industrials lead, driven by strong capital expenditure and reshoring trends. Financials follow, benefiting from wider net interest margins and stable credit quality. The materials sector is also contributing, supported by infrastructure spending and commodity price stability. You can find a deeper sector breakdown at https://fazen.markets/en. This contrasts with the more muted performance in consumer discretionary and real estate, which remain rate-sensitive.
The S&P 500's rally is on a healthier footing as earnings growth spreads beyond the largest technology stocks.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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