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What Wall Street got right this earnings season

Wall Street likes tech, and that was the right call in the latest earnings season.

Now it's paying off so far this quarter.

A quick survey of eight major investment analysts' calls shows that most firms were overweight technology, even though it had been underperforming as the worst sector in terms of stock performance in the second quarter, with a 3.3 percent decline.

That, however, reversed sharply during the latest reporting season in July, and tech went from being worst to first in the current quarter — up more than 9.5 percent so far.

"It's a trend you tend to see in earnings. The sector where the bar was set lowest tends to do best," said Paul Hickey, co-founder of Bespoke Investment Group.

Another favorite sector on the Street was health care. Both the S&P 500 tech and health-care sectors have seen more than 80 percent of their components beat expectations for earnings per share. That's well above the 70 percent rate of the S&P 500 overall, according to Thomson Reuters data.

Of the eight major Wall Street analysts' calls that CNBC reviewed, six were overweight health care and five were overweight tech, according to their latest reports. Only Morgan Stanley was underweight tech.

Adam Parker, chief U.S. equity strategist at Morgan Stanley, was not available for comment but in his Aug. 8 report he said the "sector looks attractive in aggregate on valuation, cash flows, and cash balances, but few individual securities embody the attributes of the whole." Instead, in the growth category of stocks, Parker prefers health care.

On the defensive front, Morgan Stanley is underweight consumer staples for its valuation and exposure to a strengthening dollar, while overweight utilities based on likely declines in the 10-year Treasury yield. The benchmark yield has followed global yields lower as central banks worldwide remain accommodative in a low-growth environment.

Materials and utilities have had the lowest beat rates, 52 percent and 54 percent, respectively, according to Thomson Reuters. Most Street analysts are neutral or underweight the two sectors.

The Wells Fargo Investment Institute was right on the three best-performing sectors this earnings season so far: health care, technology and consumer discretionary. The firm expects the S&P 500 to reach a range of 2,190 to 2,290 by the end of the year.

"Cyclical companies look to be showing slight improvement. They should continue to have the benefit of an improving economy," said Sean Lynch, co-head of global equity strategy at Wells Fargo Investment Institute. He expects the broader stock market to focus more on earnings and economic growth in the second half of the year.

To be sure, there are other factors besides earnings beats to consider when selecting sectors or stocks for outperformance, including dividends and capital expenditure.

Total return for the S&P 500 was more than half a percent greater in the first two quarters of 2016 when factoring in dividends, according to Howard Silverblatt of S&P Dow Jones Indices. His analysis also showed utilities, telecom and energy total sector returns were nearly 1 percentage point higher because of those dividends.

Looking to the rest of the year, some analysts are watching financials, the second-best performing sector for the quarter so far with gains of 5 percent. The group had a slightly-below average earnings beat rate for the quarter of 66 percent.

"They're basically through their earnings and I think they basically came through more unscathed than people were expecting," Lynch said, "and the fact the Fed hasn't taken away the possibility of raising rates, financials could catch a bid."