Wall Street analysts have assigned Buy ratings to 60 percent of S&P 500 stocks, a level that FactSet data identifies as the highest on record. This surge in bullish positioning occurs as the market prepares for the third quarter earnings season, a dynamic that leaves limited room for disappointment if corporate results or guidance fail to meet elevated expectations.
The current distribution of analyst ratings deviates significantly from historical norms. According to the FactSet report, the share of Buy ratings exceeds its five-year average of 55.9 percent, while Hold ratings sit below their five-year average of 38.6 percent. Sell ratings are also lower than their five-year average of 5.5 percent. Since June 30, the percentage of Buy ratings on S&P 500 companies has ticked up slightly to 59.9 percent from 59.7 percent.
Optimism is not evenly distributed across the market. Analysts show the strongest conviction in the Communication Services and Technology sectors, both with 70 percent of stocks carrying a Buy rating. The Materials and Energy sectors follow with 64 percent Buy ratings each, and the Health Care sector has 61 percent. In contrast, the Consumer Staples sector attracts the least bullish attention, with only 45 percent of its stocks rated as Buy. This sector also holds the highest percentages for Hold ratings at 47 percent and Sell ratings at 7 percent.
Charlie Bilello, chief market strategist at Creative Planning, noted that when widespread expectations for good news exist, there is less capacity for positive surprises to drive further gains. The underlying driver for this collective optimism is the projected trajectory of corporate earnings.
FactSet data indicates that the S&P 500 is expected to report year-over-year earnings growth of 29.5 percent for the recently completed third quarter. If this forecast materializes, it would mark the third consecutive quarter of earnings growth above 25 percent and the eighth straight quarter of double-digit percentage growth. Looking ahead, analysts are calling for fourth quarter earnings growth of 27.6 percent. For full year 2026, Wall Street analysts predict year-over-year earnings growth of 32.4 percent.