Second quarter earnings season shifts into overdrive this week, with some heavyweights like Netflix and Intel reporting. But will companies excite or disappoint Wall Street? Sentiment suggests investors might be disappointed, especially with the Energy sector.

S&P 500 declined due to Grexit, China, oil

Goldman Sachs analyst David Kostin and his team report that the S&P 500 declined 1.2% last week. Utilities was the best-performing sector, gaining 1.1%. Materials was the worst-performing sector, declining 3.1%. The Goldman team expects the S&P 500 to trade at around 2150 in the next 12 months, which would be about a 4.8% increase.

Looking at the aggregate second quarter S&P 500 earnings, S&P Capital IQ reports that estimates suggest $28.42 per share. That would be a 4.45% year over year growth decline. The firm also reports that this would be the first decline since the third quarter of 2009 if the estimates are correct.

Energy to weigh on the S&P 500

Seven of the ten sectors in the benchmark index are expected to post positive earnings growth for the second quarter. The Energy sector is widely expected to be the worst-performing, which will significantly impact the S&P 500’s earnings because of its heavy weighting. Excluding the drag from Energy, the S&P 500 would post a growth rate of 3.3% in the second quarter, according to Lindsey Bell of S&P Capital IQ.

Here’s a look at Bell’s growth estimates for the index (Chart is courtesy S&P Capital IQ).

2Q earnings

And here’s a further breakout for estimates across the index from the Goldman team (Most graphs/ charts are courtesy Goldman Sachs.):

2Q earnings

A new warnings about Energy

Despite the expected plunge in Energy earnings, the Kostin and team said the second quarter should represent a rebound for the sector. Oil prices increased during the second quarter, which should have improved guidance for earnings in the sector.

However, the Goldman team still warns investors not to be too excited about Energy earnings because the second quarter increases in Brent crude oil prices were mostly erased last week. They also note that comments from first quarter earnings calls and the stagnant growth in gross domestic product suggest a cautious outlook should be expected.

2Q earnings

What to look for in 2Q earnings

The Goldman Sachs team listed three main things they will be watching in earnings reports over the next three weeks. First, they want to see how margins in the Energy sector are responding to changes in oil prices during the first quarter. They also want to see how management in the sector are guiding for the next few quarters.

Second, they want to see if companies in the Consumer Discretionary sector and consumer finance suggest that consumers are starting to spend the money they have saved on gas over the last few quarters. And third, they’re looking for evidence that economic growth in the U.S. is beginning to accelerate.

2Q earnings season kicks into high gear

The next three weeks will be heavy with earnings with nearly 80% of the S&P 500 reporting within this time frame. The Goldman Sachs team reports that the majority of companies in the index are in their buyback blackout windows.

2Q earnings

JPMorgan and Wells Fargo are scheduled to report on Tuesday morning. Johnson & Johnson and Yum! Brands are also scheduled to report tomorrow. On tap for Wednesday are Netflix and Intel, while eBay and Google are scheduled to report on Wednesday.