As the first-quarter earnings season kicks off in mid-April, US stock markets find themselves at a crucial juncture, facing tests from ongoing geopolitical tensions and their potential impact on corporate bottom lines. The war in Iran continues to be a dominant headline. Investors will be keenly awaiting corporate reports to assess how businesses are being impacted by the war and rising input costs.
The season arrives after a strong rally in the S&P 500, but with lingering concerns about the sustainability of that growth. Analysts expect to see whether earnings estimates will hold up or get marked down. Company guidance will be incredibly paramount. Forecasts for first-quarter earnings growth have jumped from 8-9% year-over-year, to nearly 14%, with full-year estimates pushing to nearly 19% for 2026.
Bank reports will provide a crucial window into the economy's health, with some concerns about a slowdown in the labor market. JPMorgan Chase's earnings on April 14 will be closely watched for management's insights on the macro environment. The Federal Reserve is also closely monitoring the oil shock. The Fed funds rate sits at 3.50% to 3.75%.
Investors will also be parsing inflation data for signs that high energy prices are seeping into core inflation. Some believe that the current inflation data is manageable and expect energy pressures to moderate, pending a resolution to the Hormuz crisis. The coming weeks represent a major inflection point for investor expectations, where clarity on the war or optimism in earnings reports could alleviate near-term concerns.
