Earnings in Focus Amid Market Uncertainty

1. Markets Navigating Headlines, Earnings to Provide Direction Markets continue to be driven by day-to-day developments surrounding the conflict in Iran, with ongoing uncertainty around the ceasefire and the stability of the Strait of Hormuz. Despite the constant flow of headlines, equity markets have shown resilience off recent lows. Since March 30th, the S&P 500 has rebounded approximately 7.5%, the Dow Jones Industrial Average is up 6%, and the Nasdaq has gained roughly 10%,¹ reflecting improving sentiment even amid elevated uncertainty.

As earnings season begins, investors will gain clearer insight into the trajectory of corporate fundamentals and whether recent volatility has materially impacted business conditions. Early results have been mixed but constructive. Goldman Sachs reported revenue growth of 14.5%² year-over-year, though the stock reaction was muted as its FICC segment underperformed expectations, particularly within mortgage and credit-related products.

Looking ahead, the broader banking sector appears well-positioned heading into earnings. While results will likely include both positives and offsets given the diversified nature of these institutions, overall expectations remain constructive. Bank stocks have lagged year-to-date, and stronger earnings coupled with stable guidance could help drive improved sentiment and further market stabilization in the weeks ahead.

2. Earnings Validation, Policy Focus, and Shifting Market Leadership One of the more notable developments in recent weeks has been the steady upward revision in earnings expectations, which likely contributed to the market’s rebound from the March lows. While valuations are not cheap, multiples have compressed meaningfully, down roughly 13%, bringing the S&P 500 to around 20x earnings.³ That said, these valuations now require confirmation, placing greater importance on the current earnings season to validate whether corporate performance can support the improved outlook.

From a policy perspective, the market’s focus remains centered on inflation rather than labor market deterioration, reflecting the Federal Reserve’s dual mandate. While nonfarm payrolls data can be volatile and subject to revision, weekly jobless claims continue to serve as a more reliable real-time indicator. On that front, conditions remain stable, with the four-week moving average at approximately 209,500,⁴ well below levels historically associated with recession. Growth expectations, however, have moderated, with the Atlanta Fed GDP tracker declining to 1.3% from closer to 5% earlier in the year. Looking ahead, the implementation of the One Big Beautiful Bill could provide incremental support, with estimates suggesting a potential 80 basis point boost to GDP.⁵

Beneath the surface, market leadership is evolving in a meaningful way. The semiconductor sector has shown notable strength, with the iShares Semiconductor ETF (SOXX) up approximately 23% year-to-date, while software has lagged significantly, as reflected by the iShares Expanded Tech-Software Sector ETF (IGV) declining around 24%.⁶ A similar divergence is evident in style leadership, with the Russell 1000 Value Index (RLV) up 5.26% year-to-date compared to the Russell 1000 Growth Index (RLG) down 5.29%.⁷

3. Earnings Season Kicks Off This week marks the beginning of a closely watched earnings season, led by the large banks and early reporters like Johnson & Johnson, though the bulk of corporate results will follow in the coming weeks. Bank commentary will be particularly important, as it should provide real-time insight into lending activity, credit conditions, and overall economic momentum. Recent Federal Reserve H.8 data points to a constructive backdrop, with both loans and deposits ending the first quarter at record highs. Notably, loan growth accelerated to 7.5% year-over-year, the fastest pace in three years, reinforcing the view that banks are actively supporting economic activity through increased lending.

From a seasonal perspective, April has historically been one of the weaker months for markets, but this is typically followed by more constructive performance in May and June. As a result, this earnings season has the potential to serve as an important catalyst for sentiment and provide greater clarity on both the durability of the economic expansion and the path forward for equities.

4. Fixed Income U.S. Treasury yields declined across the curve last week as investors grew increasingly concerned that the ongoing conflict in Iran could weigh on global growth and elevate recession risks. By Friday’s close, the 2-, 10-, and 30-year yields fell 4, 2, and 1 basis points, respectively.⁸

Credit markets strengthened last week with tightening evident across both the investment-grade and high-yield sectors. Investment-grade spreads narrowed 4 basis points to +119, while high-yield spreads tightened 27 basis points to +339. Despite the ongoing geopolitical uncertainty, both markets trade below their pre-war spread levels. Tax-exempt yields moved lower across the curve, decreasing 9-12 basis points and outpacing the rally in Treasuries.⁹

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Return for Selected Indices

Sources:

1. Bloomberg: As of April 13, 2026 ↩︎
2. Goldman Sachs Earnings Call: As of April 13, 2026 ↩︎
3. Bloomberg: As of April 13, 2026 ↩︎
4. Department of Labor: As of April 9, 2026 ↩︎
5. Wells Fargo: As of December 22, 2025 ↩︎
6. Bloomberg: As of April 13, 2026 ↩︎
7. Bloomberg: As of April 13, 2026 ↩︎
8. Bloomberg: As of April 13, 2026 ↩︎
9. Bloomberg: As of April 13, 2026 ↩︎

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