Executive Summary 

• Q1 earnings season has kicked off with early results pointing to a strong quarter of profitability.
• Earnings are expected to grow across the majority of sectors, with technology the biggest driver.
• Higher prices should be an energy sector tailwind but do not appear likely to derail growth for the broader index.
• Earnings expectations continue to point to strong growth in both the first quarter and the full year.
• Earnings are expected to be resilient despite geopolitical risks and potential energy headwinds. 

Q1 earnings season has kicked off with early results pointing to a strong quarter

• Earnings season is underway, with several major banks already reporting and a heavy reporting schedule on deck over the next two weeks.

• Early results point to a strong Q1, with ~84% of companies beating consensus expectations so far, well above the 5-year average.

Shown on the left is a timeline of the cumulative share of the S&P 500’s market capitalization that have or will report Q1 2026 earnings results. Shown on the right is the percentage of companies within the S&P 500 that have reported earnings to date ahead of consensus expectations. The dotted line reflects the 5-year average percentage of companies reporting positive earnings surprises, and the hashed bar represents results reported to date for Q1 2026. Past performance may not be indicative of future results. One cannot invest directly in an index.

Earnings are expected to grow across the majority of sectors, with technology the biggest driver

• Most sectors are expected to post positive results this quarter, led by technology, financials, and materials, while healthcare, energy, and communications are expected to lag.

• Strength in technology and financials is expected to drive overall earnings, potentially lifting S&P 500 growth into double digits.

Data shown are the blended growth rates in earnings per share for the S&P 500 and its eleven constituent sectors for Q1 2026 on a year-over-year, percent change basis. Blended growth figures combine actual results with consensus expectations for companies that have yet to report. The S&P 500 is a market capitalization weighted index of large cap stocks in the U.S. Actual results may differ materially from expectations. One cannot invest directly in an index.

Energy-related headwinds may build later in the year, but broader earnings growth is expected to remain intact

• The impact of higher energy costs from the conflict in the Middle East is likely to emerge more clearly later in the year, as higher prices affected only a small portion of Q1.

• The energy sector is expected to drive stronger growth in the remaining quarters of 2026. Even though higher energy costs are likely to be a headwind for energy-consuming sectors, the rest of the index is still expected to deliver strong results this year.

 Data shown represent projected year-over-year earnings per share growth for each quarter of 2026 for the S&P 500 excluding the energy sector and the energy sector of the S&P 500. Figures are based on bottom-up equity analyst estimates and are subject to change. Actual results may differ materially from expectations. One cannot invest directly in an index. 

Earnings expectations continue to point to strong growth in both the first quarter and the full year

• Earnings growth expectations have continued to move higher, pointing to a strong Q1 and an even stronger full year.

• Despite the conflict in the Middle East and the risk of higher energy prices, estimates have remained resilient and are still being revised upward, suggesting investors continue to see a solid underlying earnings backdrop.

Despite considerable geopolitical risk, earnings estimates remain resilient compared to past periods

• Geopolitical risk has surged to levels comparable with past global shocks, including 9/11 and the beginning of the Russia-Ukraine war. After such spikes, what has mattered most for earnings prospects has been the health of the underlying economy.

• For example, 9/11 occurred against a backdrop of recession as the U.S. continued to reckon with the speculative excesses of the late-1990s. In contrast, the Russia/Ukraine war did not tip the U.S. into recession, so earnings expectations continued their upward trend in the immediate aftermath.

• The base case is that the conflict in Iran is unlikely to lead to recession in the U.S., justifying a resilient earnings theme through Q1 and the rest of 2026.