Periods of geopolitical uncertainty tend to test investors’ resolve. The war with Iran and turmoil in the Middle East, as well as the disruptions to energy supply and renewed volatility in oil prices, has understandably raised concerns about inflation, interest rates, and economic growth. Yet as first-quarter earnings season unfolds, one message is coming through clearly: corporate earnings remain remarkably resilient.
A Strong Start to Earnings Season
Despite headline risk, earnings results for the S&P 500 are tracking well ahead of historical norms. With earnings season underway and roughly 10% of companies having reported, 88% have exceeded earnings expectations, well above long-term averages. The magnitude of these earnings surprises is also larger than usual, with reported profits running more than 10% above consensus estimates.
At present, blended earnings growth for the S&P 500 Index is approximately 13% year over year. If sustained, it would mark the sixth consecutive quarter of double‑digit earnings growth. Revenue growth is also solid, near 10%, its strongest showing since late 2022. These data points highlight that, even amid geopolitical uncertainty, underlying demand and pricing power remain intact across much of Corporate America.
Figure 1: Corporate earnings are exceeding expectations, underscoring the resilience of U.S. companies despite geopolitical turmoil. Source: FactSet
Sector Leadership Tells an Important Story
This earnings resilience has not been limited to a narrow slice of the market. Eight of the eleven S&P 500 sectors are reporting or are expected to report year-over-year earnings growth. Information Technology, Materials, Financials, and Utilities are leading the way. This leadership mix matters. Technology and Financials tend to benefit from ongoing capital investment and balance sheet strength, while Utilities typically provide defensiveness during periods of uncertainty. In other words, the composition of earnings growth aligns well with a market navigating turbulence rather than one bracing for recession.
Why Earnings Often Prove More Durable Than Headlines
One reason earnings tend to hold up during volatile periods is data-driven rather than emotional. Historically, actual earnings growth has exceeded estimates in 41 of the past 44 quarters. As companies report better-than-expected profits, those higher numbers replace lower estimates, thus lifting overall growth rates through the earnings season. Using conservative historical assumptions, first-quarter 2026 earnings growth could ultimately come in at 18%, once the reporting season is complete. While not guaranteed, this pattern helps explain why markets often stabilize, and sometimes recover, even when macro headlines remain challenging.
Figure 2: Historically, upside surprises drive earnings growth higher as the quarter progresses. Source: FactSet
Valuations Have Become More Attractive
While earnings expectations have been resilient, valuations have moved in the opposite direction. Market pullbacks, primarily concentrated among the Mag 7 mega-cap tech leaders, have compressed price-to-earnings multiples. The S&P 500 now trades near 20x forward earnings, down from recent highs, while the remaining stocks outside the top names trade closer to 18x. This is important for long-term investors as lower valuations provide a broader margin of safety, particularly when earnings expectations are still rising. Valuation alone is never a catalyst, but valuation combined with improving fundamentals paints a compelling investment picture.
Figure 3: Recent market volatility has compressed equity valuations. Source: J.P. Morgan Asset Management
Earnings Estimates Are Still Rising
Perhaps most encouraging is that analysts continue to revise earnings estimates higher, despite higher energy prices and geopolitical risk. Forward earnings expectations for the S&P 500 are now modestly above their late-February levels, signaling that analysts do not yet see energy-driven margin pressure overwhelming corporate profitability. As illustrated in the chart below, earnings estimates tend to be revised downward significantly over the course of a year. The opposite holds true in 2026. If current forecasts are even close to accurate, 2026 earnings growth has actually been revised up and could potentially approach 19%, following already-strong gains in prior years. That is not the profile of a market facing widespread earnings deterioration.
Figure 4: Despite geopolitical headwinds, fundamentals are strong and analysts continue to revise earnings expectations higher. Source: FactSet, Goldman Sachs Global Investment Research
Navigating Volatility With Perspective
None of this is to minimize real risks. Higher oil prices can weigh on margins, inflation uncertainty complicates monetary policy, and market volatility is likely to persist as long as geopolitical tensions remain unresolved. Short-term drawdowns should be expected.
However, for long-term investors, history suggests that earnings ultimately drive equity markets, not headlines. What we are seeing today is a market repricing risk while fundamentals continue to improve. This is a formula that has historically provided attractive opportunities for disciplined investors.
While geopolitical uncertainty may dominate the news cycle, investors need to ignore the noise. Corporate earnings remain resilient, valuations are generally more attractive than they have been, and forward earnings expectations continue to point higher. Earnings resilience is the headline worth paying attention to.
Earnings Resilience is the Headline
by Bruce Hoffmann
Periods of geopolitical uncertainty tend to test investors’ resolve. The war with Iran and turmoil in the Middle East, as well as the disruptions to energy supply and renewed volatility in oil prices, has understandably raised concerns about inflation, interest rates, and economic growth. Yet as first-quarter earnings season unfolds, one message is coming through clearly: corporate earnings remain remarkably resilient.
A Strong Start to Earnings Season
Despite headline risk, earnings results for the S&P 500 are tracking well ahead of historical norms. With earnings season underway and roughly 10% of companies having reported, 88% have exceeded earnings expectations, well above long-term averages. The magnitude of these earnings surprises is also larger than usual, with reported profits running more than 10% above consensus estimates.
At present, blended earnings growth for the S&P 500 Index is approximately 13% year over year. If sustained, it would mark the sixth consecutive quarter of double‑digit earnings growth. Revenue growth is also solid, near 10%, its strongest showing since late 2022. These data points highlight that, even amid geopolitical uncertainty, underlying demand and pricing power remain intact across much of Corporate America.
Sector Leadership Tells an Important Story
This earnings resilience has not been limited to a narrow slice of the market. Eight of the eleven S&P 500 sectors are reporting or are expected to report year-over-year earnings growth. Information Technology, Materials, Financials, and Utilities are leading the way. This leadership mix matters. Technology and Financials tend to benefit from ongoing capital investment and balance sheet strength, while Utilities typically provide defensiveness during periods of uncertainty. In other words, the composition of earnings growth aligns well with a market navigating turbulence rather than one bracing for recession.
Why Earnings Often Prove More Durable Than Headlines
One reason earnings tend to hold up during volatile periods is data-driven rather than emotional. Historically, actual earnings growth has exceeded estimates in 41 of the past 44 quarters. As companies report better-than-expected profits, those higher numbers replace lower estimates, thus lifting overall growth rates through the earnings season. Using conservative historical assumptions, first-quarter 2026 earnings growth could ultimately come in at 18%, once the reporting season is complete. While not guaranteed, this pattern helps explain why markets often stabilize, and sometimes recover, even when macro headlines remain challenging.
Valuations Have Become More Attractive
While earnings expectations have been resilient, valuations have moved in the opposite direction. Market pullbacks, primarily concentrated among the Mag 7 mega-cap tech leaders, have compressed price-to-earnings multiples. The S&P 500 now trades near 20x forward earnings, down from recent highs, while the remaining stocks outside the top names trade closer to 18x. This is important for long-term investors as lower valuations provide a broader margin of safety, particularly when earnings expectations are still rising. Valuation alone is never a catalyst, but valuation combined with improving fundamentals paints a compelling investment picture.
Earnings Estimates Are Still Rising
Perhaps most encouraging is that analysts continue to revise earnings estimates higher, despite higher energy prices and geopolitical risk. Forward earnings expectations for the S&P 500 are now modestly above their late-February levels, signaling that analysts do not yet see energy-driven margin pressure overwhelming corporate profitability. As illustrated in the chart below, earnings estimates tend to be revised downward significantly over the course of a year. The opposite holds true in 2026. If current forecasts are even close to accurate, 2026 earnings growth has actually been revised up and could potentially approach 19%, following already-strong gains in prior years. That is not the profile of a market facing widespread earnings deterioration.
Navigating Volatility With Perspective
None of this is to minimize real risks. Higher oil prices can weigh on margins, inflation uncertainty complicates monetary policy, and market volatility is likely to persist as long as geopolitical tensions remain unresolved. Short-term drawdowns should be expected.
However, for long-term investors, history suggests that earnings ultimately drive equity markets, not headlines. What we are seeing today is a market repricing risk while fundamentals continue to improve. This is a formula that has historically provided attractive opportunities for disciplined investors.
While geopolitical uncertainty may dominate the news cycle, investors need to ignore the noise. Corporate earnings remain resilient, valuations are generally more attractive than they have been, and forward earnings expectations continue to point higher. Earnings resilience is the headline worth paying attention to.
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