Investors will be parsing first-quarter corporate reports next week for signs that U.S. companies can sustain profit growth in the face of recent geopolitical turbulence and higher energy costs. The earnings season opens with major banks, followed by a wave of results from large public companies, offering fresh data on revenue, margins and economic behavior.
Expectations for a strong quarter and for continued profit expansion over the year have underpinned bullish positioning in equities. Those expectations have proven resilient even as the conflict in Iran intensified over the past month.
"The reason the market still is so robust is because earnings estimates just keep moving higher. There’s yet to be any sort of negative impact on fundamentals from the war," said Nick Giorgi, chief equity strategist at Alpine Macro. "If you start to see actually a bit of a negative cascade from fundamentals, then all bets are off."
Market backdrop and recent moves
Optimism that geopolitical tensions might ease emerged this week after a two-week ceasefire deal between the United States and Iran, an agreement that followed public warnings from U.S. President Donald Trump about the potential for a severe escalation. That prospect of calmer conditions helped equities regain much of the losses tied to military activity that began in late February involving the U.S. and Israel.
As of midday Friday, the S&P 500 had recovered nearly all of its earlier decline tied to those strikes and was less than 1% lower over that span. Still, market participants expect sensitivity to developments in the Middle East to persist through the coming reporting period.
What to expect from the reporting cycle
An estimated 10% of the S&P 500 will have reported first-quarter results by next Friday, with the bulk of companies publishing results in the ensuing weeks. In addition to bank earnings that kick off the season, major companies scheduled to report include Netflix, Johnson & Johnson and PepsiCo.
On aggregate, S&P 500 earnings are expected to rise by about 14% compared with the year-ago period, according to analyst estimates compiled by LSEG IBES as of Friday. If realized, that would extend a streak of double-digit quarterly growth to six consecutive quarters - the longest such run since 2011, noted Mark Hackett, chief market strategist for Nationwide.
"It is somewhat of a high bar coming into the season," said Garrett Melson, portfolio strategist with Natixis Investment Managers Solutions.
Sector-level expectations are mixed beneath the surface. The heavyweight technology sector is projected to drive earnings growth of more than 40%, while healthcare sector earnings are expected to decline about 10%, according to LSEG IBES numbers.
Energy prices and the consumer
One theme analysts will monitor closely in reports and company guidance is how rising oil prices are filtering through costs and consumer budgets. Even after a pullback following the ceasefire deal, U.S. crude has risen roughly 70% so far this year, a move that could lift operating costs across many businesses and weigh on consumer spending.
Overall expectations for the full year have become more upbeat. S&P 500 earnings are now projected to increase more than 19% in 2026, up from an estimate of about 15% as of late February. "You’re going to see whether or not those earnings estimates hold up for the future or whether they get marked down," said Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Company. "Company guidance becomes incredibly paramount."
Banks as an economic signal
Reports from the banking sector will give investors an early read on credit demand, consumer behavior and broader economic resilience. Goldman Sachs is scheduled to report on Monday, followed on Tuesday by JPMorgan, the largest U.S. lender, along with Wells Fargo and Citigroup. Additional bank results will arrive later in the week.
Analysts said commentary from lenders about spending patterns and lending activity will be closely watched for evidence of a slowdown in consumption that could predate or be exacerbated by geopolitical developments.
"What they’re seeing for spending patterns is going to be pretty critical to get a sense on just how material is that kind of slowdown risk from a consumption perspective," Melson said.
Giorgi added that lending flows will be a focus. "If banks say companies ... are looking past it, they still need to invest and they’re still taking out loans, that would be a positive signal," he said.
Inflation gauge and timing risks
Outside of corporate reports, investors will also monitor a U.S. producer prices release next week, an important barometer of inflation pressures at the wholesale level.
Analysts cautioned that energy price shocks can take time to propagate through supply chains and consumer prices, raising the risk that a protracted conflict could push inflation higher and complicate the outlook for margins and real spending.
"The longer this goes on ... the greater impact it potentially has on leaking into U.S. inflation," Schutte said.
Near-term focus
Investors entering the first full week of earnings season will be balancing relatively elevated profit expectations with heightened sensitivity to geopolitical developments and oil-driven costs. Company guidance, sector breakdowns and bank commentary on lending and spending patterns are likely to shape market direction as the quarter unfolds.
In short, the coming week will offer a first substantive look at whether the current profit trajectory is sustainable or if the recent rise in energy prices and geopolitical uncertainty is beginning to pressure corporate fundamentals.