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Q4 Earnings Approaching: Sector ETFs Under Pressure
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Key Takeaways
Autos face sharp earnings pain, putting pressure on CARZ amid tariffs and softening demand.
Weak freight volumes weigh on Transportation earnings, keeping IYT under pressure.
The Q4 earnings season should be fully underway this week, with major banks such as JPMorgan Chase, BNY Mellon, Bank of America, Wells Fargo and Citigroup set to report their results. Corporate earnings expectations have strengthened over recent quarters, with estimates trending steadily higher.
S&P 500 Earnings Set for Another Strong Quarter
For Q4 2025, total S&P 500 earnings are projected to rise 7.9% year over year, supported by an 8.2% increase in revenues. If realized, this would mark the 10th consecutive quarter of positive earnings growth for the index, indicating the resilience of corporate profitability, per Earnings Trends issued on Jan. 7, 2026.
Losing Sector ETFs in Focus
While aerospace, tech and finance sectors are likely to put up a strong show in Q4 earnings season, some sectors may underperform. Below, we highlight a few sector-based exchange-traded funds (ETFs) that are likely to lose in light of Q4 earnings growth projections.
Q4 earnings are expected to be below the year-earlier level for seven of the 16 Zacks sectors, with Autos (earnings decline of -24%), Transportation (-8.5%), and Consumer Staples (4.1%) as the notable decliners.
The sector is expected to see a 24% decline in earnings, stemming from 7.3% lower revenues. This follows the sector’s earnings loss of 20.7% in Q3 of 2025 on 4% revenue growth, per the same Earnings Trends article.
Automakers absorbed increased costs from Trump tariffs in 2025. The year saw steady sales as consumers rushed to purchase existing inventory to avoid a potential price rise due to tariffs. A similar trend was also noticed before electric vehicle subsidies expired, helping lift EV sales, as quoted on ABC News.
However, as the impact of tariffs begins to filter through, auto sales are expected to soften from Q4, with lower-income buyers most likely to pull back. Supply-chain challenges, including semiconductor shortages, are added headwinds.
Transportation – iShares U.S. Transportation ETF (IYT - Free Report)
The sector is expected to lose 8.5% earnings on 1.2% revenue growth. This expected loss will follow Q3 earnings gain of just 0.3% and revenue growth of 0.9%.
Transportation sector earnings pressure emerged due to subdued freight demand. Freight volumes dropped due to earlier inventory buildup from trade policy uncertainty.
Consumer Staples – State Street Consumer Staples Select Sector SPDR ETF (XLP - Free Report)
The sector is projected to post 4% earnings decline despite 2.4% revenue growth. This would follow 0.9% earnings drop in Q3, when revenues rose 1.9%.
Consumers, especially middle- and lower-income households, have been facing pressure from sticky inflation, a soft labor market, slowing wage growth, and falling affordability. The pricing power of these companies has been under pressure.
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Q4 Earnings Approaching: Sector ETFs Under Pressure
Key Takeaways
The Q4 earnings season should be fully underway this week, with major banks such as JPMorgan Chase, BNY Mellon, Bank of America, Wells Fargo and Citigroup set to report their results. Corporate earnings expectations have strengthened over recent quarters, with estimates trending steadily higher.
S&P 500 Earnings Set for Another Strong Quarter
For Q4 2025, total S&P 500 earnings are projected to rise 7.9% year over year, supported by an 8.2% increase in revenues. If realized, this would mark the 10th consecutive quarter of positive earnings growth for the index, indicating the resilience of corporate profitability, per Earnings Trends issued on Jan. 7, 2026.
Losing Sector ETFs in Focus
While aerospace, tech and finance sectors are likely to put up a strong show in Q4 earnings season, some sectors may underperform. Below, we highlight a few sector-based exchange-traded funds (ETFs) that are likely to lose in light of Q4 earnings growth projections.
Q4 earnings are expected to be below the year-earlier level for seven of the 16 Zacks sectors, with Autos (earnings decline of -24%), Transportation (-8.5%), and Consumer Staples (4.1%) as the notable decliners.
Auto – First Trust S-Network Future Vehicles & Technology ETF (CARZ - Free Report)
The sector is expected to see a 24% decline in earnings, stemming from 7.3% lower revenues. This follows the sector’s earnings loss of 20.7% in Q3 of 2025 on 4% revenue growth, per the same Earnings Trends article.
Automakers absorbed increased costs from Trump tariffs in 2025. The year saw steady sales as consumers rushed to purchase existing inventory to avoid a potential price rise due to tariffs. A similar trend was also noticed before electric vehicle subsidies expired, helping lift EV sales, as quoted on ABC News.
However, as the impact of tariffs begins to filter through, auto sales are expected to soften from Q4, with lower-income buyers most likely to pull back. Supply-chain challenges, including semiconductor shortages, are added headwinds.
Transportation – iShares U.S. Transportation ETF (IYT - Free Report)
The sector is expected to lose 8.5% earnings on 1.2% revenue growth. This expected loss will follow Q3 earnings gain of just 0.3% and revenue growth of 0.9%.
Transportation sector earnings pressure emerged due to subdued freight demand. Freight volumes dropped due to earlier inventory buildup from trade policy uncertainty.
Consumer Staples – State Street Consumer Staples Select Sector SPDR ETF (XLP - Free Report)
The sector is projected to post 4% earnings decline despite 2.4% revenue growth. This would follow 0.9% earnings drop in Q3, when revenues rose 1.9%.
Consumers, especially middle- and lower-income households, have been facing pressure from sticky inflation, a soft labor market, slowing wage growth, and falling affordability. The pricing power of these companies has been under pressure.