A fresh set of global earnings revision data reveals a compelling trend: U.S. equity markets — and particularly the S&P 500 — are leading the current global cycle of upward EPS revisions. Analysts are becoming increasingly optimistic about U.S. corporate earnings, positioning Wall Street as the bellwether for broader economic sentiment.

Nasdaq and S&P 500 Outperform in Global Earnings Revisions

According to the chart published by Refinitiv and SG Cross Asset Research as of July 18, 2025, the global Earnings Revision Ratio (ERR) — the ratio of EPS upgrades to downgrades — shows a clear divergence across regions.

Both the Nasdaq 100 and the S&P 500 report an ERR of 1.26, meaning there are 26% more earnings upgrades than downgrades. This indicates a robust improvement in analysts’ expectations and a shift toward more favorable corporate outlooks.

In stark contrast, indices such as Switzerland’s SMI (0.54) and China’s CSI 300 (0.59) remain firmly below the 1.0 threshold, which implies that downgrades are still outpacing upgrades — a signal of subdued earnings momentum in these regions.

S&P 500 ERR Momentum Breaks Out Above Trend

The right side of the chart presents a historical time series of the S&P 500’s ERR (in red) compared with its 13-week moving average (in black). After a prolonged period of stagnation and volatility, the ERR is now showing a clear upward breakout, climbing to levels not seen since the post-COVID rally of 2021.

The short-term ERR now approaches 1.5, signaling a broad-based surge in analyst optimism. More importantly, the current upturn decisively breaks above the moving average, suggesting that this may be more than just a short-term bounce — it could mark the beginning of a new positive earnings cycle for U.S. equities.

Why the U.S. Leads: Sector Composition Matters

One key structural explanation for the U.S. lead in global EPS revisions is sector composition. U.S. indices, especially the Nasdaq and S&P 500, are heavily weighted toward high-growth sectors such as technology, semiconductors, AI, and cloud infrastructure. These areas have benefited from robust demand, pricing power, and secular tailwinds — all of which translate into stronger earnings revisions.

In contrast, indices like the Euro Stoxx 600, MSCI Emerging Markets, and FTSE 100 are more exposed to traditional industries — including financials, energy, and industrials — which face slower growth, geopolitical headwinds, and regulatory overhangs.

Key Drivers Behind the Upgrade Wave

The recent momentum in EPS upgrades for the S&P 500 can be attributed to several interlocking factors:

Strong Q2 2025 earnings beats in sectors such as technology, healthcare, and consumer discretionary.

Shifts in Federal Reserve policy expectations, with investors pricing in potential rate cuts later in 2025.

Margin recovery, driven by falling input costs and improved supply chains.

Momentum in AI and cloud infrastructure demand, supporting long-duration tech earnings.

Together, these drivers have contributed to a macro environment conducive to earnings optimism — at least in the U.S. context.

Implications for Investors: Geographic Differentiation Is Key

This data reinforces the importance of geographic allocation in portfolio strategy. Investors holding global exposure via vehicles like MSCI ACWI or Euro Stoxx 600 may underperform benchmarks heavily tilted toward the U.S., as global ex-U.S. EPS trends remain muted or negative.

As a result, institutional and retail investors alike are beginning to tactically overweight U.S. equities, particularly high-ROIC growth sectors with earnings momentum. Meanwhile, caution prevails for emerging markets and Europe, where EPS downgrades continue to weigh on performance outlooks.

Will the Revision Cycle Sustain?

Despite the current optimism, it’s important to note that earnings revision cycles are inherently volatile. Several risks could derail the current upswing:

A resurgence in inflation that forces the Fed to delay or abandon expected rate cuts.

Geopolitical shocks that impact global demand or commodity pricing.

A slowdown in consumer spending or labor market deterioration.

Furthermore, part of the current upgrade cycle may be driven by base effects — companies rebounding from previously lowered earnings expectations. Sustained optimism will require confirmation from Q3 and Q4 earnings results as well as guidance for 2026.

Conclusion: U.S. Stocks as the Earnings Cycle Bellwether

In summary, the latest data confirms that U.S. equities — led by the S&P 500 and Nasdaq 100 — are at the forefront of a new global earnings revision upcycle. Analysts are revising estimates higher at the fastest rate since the early 2020s, which bodes well for sentiment, flows, and potential multiple expansion.

However, the landscape remains uneven. Investors should remain selective — not just between regions, but within sectors — to capture the upside potential of this emerging trend. In a world where growth is scarce, the U.S. remains the most credible source of consistent earnings power.