As the second-quarter earnings season concludes, S&P 500 businesses are surpassing analysts’ profit projections at the best rate in nearly two years, while sales beats have dropped to the lowest since early 2020.

However, investors may be less tolerant if corporations fail to deliver earnings later this year.

Refinitiv IBES data predicted a 3.8% drop in second-quarter earnings, but Refinitiv expects earnings to gain 1.3% in the third quarter, 9.7% in the fourth quarter, and 11.9% in 2024.

S&P 500 valuations have increased, with value expansion accounting for 86% of the year-to-date gain through July.

Companies must prove they can generate earnings growth to maintain their market position.