Each week, Earnings Insight offers analysis of critical trends in the S&P 500. Here are key highlights of the fourth quarter 2025 earnings season.

After recently closing at a record-high value, where do industry analysts believe the price of the S&P 500 will go from here? Industry analysts in aggregate predict the S&P 500 will see a price increase of 7.5% over the next twelve months.

At this late stage of the earnings season, the S&P 500 is reporting strong results for the first quarter. Both the percentage of S&P 500 companies reporting positive earnings surprises and the magnitude of earnings surprises are above their 10-year averages. As a result, the index is reporting higher earnings for the first quarter today relative to the end of last week and relative the end of the quarter. The index is also reporting double-digit earnings growth for the second consecutive quarter.

U.S. M&A deal activity increased in September, going up 4.6% with 986 announcements compared to 943 in August. Aggregate M&A spending increased as well. In September 9.3% more was spent on deals compared to August.

Periodic report on earnings trend of S&P500

The estimated earnings decline for the S&P 500 for the fourth quarter is -3.9%, which would mark the first year-over-year earnings decline reported by the index since Q3 2020 (-5.7%).

Analysts lowered their earnings estimates more than average for the fourth quarter for companies in the S&P/TSX Composite. On a per-share basis, estimated earnings for the fourth quarter decreased by 7.1% from September 30 to December 31.

The (blended) net profit margin for the S&P 500 for Q4 2022 is 11.4%, which is below the previous quarter’s net profit margin of 11.9% and below the year-ago net profit margin of 12.4%. However, it is equal to the 5-year average net profit margin (11.4%).

The fourth quarter earnings season for the S&P 500 is not off to a strong start. To date, the number and magnitude of positive earnings surprises reported by S&P 500 companies are below their 5-year and 10-year averages. Overall, the index is reporting a year-over-year decline in earnings for the first time since Q3 2020.

FactSet’s U.S. Mergers and Acquisitions (M&A) data suggested continued weakness in the M&A markets as 2022 progressed. After running down roughly 20% in the first half, deal counts were down 40% year/year by November with some acceleration in the decline as the year ended.

U.S. M&A deal activity decreased in December, going down 13.2% with 1,089 announcements compared to 1,255 in November. Aggregate M&A spending decreased as well. In December, 54.8% less was spent on deals compared to November.

While the majority of S&P 500 companies will report earnings results for Q4 2022 over the next few weeks, 4% of the companies in the index (20 companies) had reported earnings results for the fourth quarter through January 12.

For 2023, the bottom-up EPS estimate for the S&P 500 (which reflects an aggregation of the median EPS estimates for CY 2023 for all of the companies in the index) is $232.53. However, what is the likelihood that $232.53 will be the final EPS value for the S&P 500 in 2023?