By Caroline Valetkevitch

NEW YORK U.S. companies are set for their biggest year-over-year gain in quarterly earnings since the second quarter of 2022 after a high percentage of S&P 500 companies beat Wall Street expectations.

With results in from almost all of the S&P 500 companies, overall third-quarter earnings are estimated to have increased 6.3% from the year-ago period, LSEG data showed on Friday.

That is well above the 1.6% third-quarter earnings gain estimated by analysts Oct. 1.

LSEG said that 81.3% of the quarterly reports surpassed analysts' earnings expectations, which is the highest beat rate since the second quarter of 2021.

To be sure, analysts have been cutting fourth-quarter S&P 500 estimates, with earnings for the current quarter now expected to be up just 5.8% from a year ago, compared with an expected gain of 11% at the start of the quarter, the data showed.

For the third-quarter earnings season, technology and communication services have the highest beat rates of the 11 S&P 500 sectors, with 90% of technology reports coming in above analysts' earnings estimates and 89% of communication services reports surpassing expectations.

Microsoft was among the big-name S&P 500 companies that produced above-expectation results, with its cloud-computing and PC businesses growing as customers anticipate using its artificial-intelligence offerings.

Investors had been worried about third-quarter U.S. earnings following a 2.8% year-over-year S&P 500 profit decline in the second quarter and after a recent sharp rise in U.S. Treasury yields.

Stocks have risen since the end of the October, and on Friday the S&P 500 hit its highest level intraday since Sept. 20.

(Reporting by Caroline Valetkevitch; Editing by Rod Nickel)