Resilience

With everything that’s happening in the Middle East, the potential escalation with Turkey, the ongoing negotiations to reopen Hormuz, and the private credit issues, you would think the market should be down for the year. But it’s not. The S&P500 is up YTD, as you can see in the chart below. It’s actually 35 points from all time highs. The resilience of this market is remarkable. Perhaps the reason why investors have found renewed interest in the U.S. equity market has to do with the current earnings season: Analysts anticipate solid double-digit growth for the S&P 500, marking the sixth consecutive quarter of such expansion: EPS growth: 12.6%–13.2% year-over-year. Revenue growth: Approximately 9.7% year-over-year, the strongest top-line pace since Q3 2022. Last year around this time, we have the liberation day shock, and since then the S&P500 went up almost 30%. There is a catch: this earnings report was built months or quarters ago, unaffected by wars, oil, or inflation concerns. Current developments will come into play in the next 2-3 quarters (if at all). The key this earnings season is the concerns CEOs and CFOs will express during earnings calls.

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