Corporate earnings were for the most part strong in the second quarter and this momentum is sustainable for at least the next couple of quarters, according to Mike Thompson of S&P Global Market Intelligence.
Consensus estimates are calling for a more than 6 percent increase in corporate earnings in the third quarter, Thompson explained on CNBC's "Squawk Box" segment. There could also be an upside surprise of 2 to 3 percent could result in an earnings growth as much as 9 percent.
Technology companies will provide the leadership in the next round of corporate earnings and are expected to show 11 percent growth, followed by financials at 7 percent, Thompson added.
On the other hand, the odds of an earnings miss is "unlikely" as company's are now cautious about over-promising and under-delivering on earnings, he continued. At the same time, there are some areas of concern. Specifically, the consumer discretionary sector is expected to show consecutive quarters of negative growth as consumers are migrating towards online channels.
Nevertheless, this represents a "structural change" and comes at a time when retail sales as a whole remain "pretty strong." As such, traditional brick and mortar stores are expected to continue suffering, which implies investors should be selective in their stock picking heading into the next earnings season.
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