Wall Street has been hyperfocused on the U.S.-Iran war for more than six weeks. That’s starting to change as first-quarter corporate earnings pour in. Leading banks such as Goldman Sachs , JPMorgan Chase and Morgan Stanley have all posted quarterly reports this week — along with pharmaceutical giant Johnson & Johnson . And while it’s still super early in the season, the early indications are promising — positioning the stock market for further gains. Eighty percent of the roughly 30 S & P 500 companies that have reported have topped expectations, according to FactSet. The blended, first-quarter earnings growth rate, which factors in profit expansion from companies that already posted results and estimates from those that haven’t, sits at 12.4%. If that growth rate holds, it would mark the sixth straight quarter of double-digit earnings expansion, FactSet data shows. This earnings season could also give a boost to perhaps the most important sector in the market: Technology. Scott Rubner of Citadel Securities pointed out that the S & P 500 tech sector is trading at about 22 times forward earnings — well below below the five-year average multiple of 25.9. The tech-heavy Nasdaq-100 index has a forward price-to-earnings ratio of 23.8, also below its five-year average. “Valuations have compressed meaningfully into earnings, particularly in technology,” Rubner wrote. “The setup into earnings remains asymmetric. Positioning is still light following the recent de-risking, leaving room for incremental fundamental buying.” That buying could take the broader market back to all-time highs. The S & P 500 closed Tuesday just 0.2% below its all-time closing high of 6,978.60, and only 0.5% away from making a new intraday record, above the old 7,002.28. “We expect S & P 500 corporate profits to increase about 17% for the first quarter of this year, marking the fastest pace of growth since the fourth quarter of 2021, driven by a combination of broad-based strength and robust demand for semiconductors from the AI buildout,” UBS Global Wealth Management strategists wrote. “So, we maintain our Attractive view on U.S. equities, favoring consumer discretionary, financials, health care, industrials and utilities in the current environment.”
