An 18-month recession at the biggest businesses in America just ended

Mike Segar/Reuters

America's largest companies had some good news this quarter.

A little over 90% of S&P 500 companies have reported their quarterly results, and it's become clear that the recession in corporate profits has come to an end.

Since the second quarter of 2015, S&P 500 earnings reports have shown a decline in profits — year-over-year. A decline for two consecutive quarters indicates an earnings recession.

Based on the companies that have reported so far this quarter, S&P earnings will be up 2.75% from the prior year's third quarter according to John Stoltzfus, Chief Investment Strategist at Oppenheimer.

The return in profit growth  came earlier than most had called for. In fact, the consensus projection from S&P Global Market Intelligence at the start of this earnings season was a decline of -0.96% for the companies making up the index.

"Overall results have decidedly exceeded consensus expectations at the start of 3Q earnings season, which called for a sixth consecutive quarter of negative earnings growth," wrote Stoltzfus in a note to clients on Monday.

Mike Segar/Reuters

This also comes despite the continued drag on earnings from the energy sector. As noted by Stoltzfus, the drop in the price of oil once again drove energy sector way down, this quarter by 62% from the year before. Though, to be fair, this is also actually an improvement, from previous quarters.

Leading the comeback is the financial sector, which posted growth of 13.1% in profits from the third quarter of last year. Most major banks surprised to the upside on earnings, even Wells Fargo in the midst of its ongoing fake accounts scandal bested analysts' estimates for profits.

In fact, the number of companies in the broader S&P 500 beating analysts' estimates was well above average for the quarter. According to John Butters at FactSet, 71% of companies that have reported beat their estimates, higher than the five-year trailing average of 67%.

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