As Wall Street prepares for another earnings season that promises to deliver the weakest profit growth in nearly two years, the disconnect between corporate fundamentals and soaring equity valuations has rarely been more pronounced, with analysts now expecting second-quarter earnings for S&P 500 companies to advance just 4.8 per cent year-on-year according to FactSet data, a marked deceleration from the double-digit growth rates that powered markets through much of 2024 and early 2025.

The slowdown represents more than a cyclical pause in corporate profitability, reflecting instead a broader structural shift as companies struggle with margin pressures from elevated labour costs, supply chain disruptions, and the persisting effects of monetary tightening that have begun to weigh on consumer demand across key sectors. What makes this earnings season particularly influential is not merely the pace of deceleration but the extent to which Wall Street has systematically revised expectations downward, with analysts cutting their profit forecasts more aggressively than in any comparable period since the pandemic. Yet, equity markets continue to trade within striking distance of all-time highs.