Summary
The stock market has had a bumpy ride so far in 2026. In the employment economy, concerns about slowing jobs growth have been exacerbated by signs of increasing layoffs. Mixed signals from the White House — on Greenland, Iran, and a range of domestic and trade-related issues — have kept investors on edge. Meanwhile, the on-again, off-again fear of an AI bubble is on again. In the background, consistently strong (and accelerating) corporate earnings have helped ease concerns about employment and other actual and potential negatives. Based on a better-than-expected calendar 4Q25 earnings season to date, we raised our final estimate of 2025 S&P 500 earnings from continuing operations. We also are raising our estimate of 2026 S&P 500 earnings and implementing a formal 2027 forecast. Among the companies that have reported to date, over three-quarters have reported earnings above the pre-reporting consensus, in line with the long-term average. The magnitude of the EPS beat against expectations, in the high-single-digit range, has been above the midpoint of the long-term range of 5%-9%. Other highlights include revenue growth in high-single-digit percentages as companies successfully navigate tariffs — and in many cases shift emphasis to earnings growth in overseas markets. Companies also have been able
