Q1 earnings season is déjà vu all over again for a market that has swapped tariffs for warQ1 earnings season is déjà vu all over again for a market that has swapped tariffs for war

After reeling from a shock delivered by the White House, US stocks are rebounding vigorously heading into Q1 earnings season… which sounds strikingly similar to what was transpiring about a year ago, Sherwood News Markets Editor Luke Kawa noted. 

In 2025, President Trump slashed reciprocal tariffs on April 9, two days before JPMorgan’s results unofficially kicked off earnings season. This year, Trump announced a two-week ceasefire late on April 7, sending the markets back up on optimism of a resolution. If stocks repeat the patterns of a year ago, it could see the**** recent unprecedented divergence between stock prices (falling) and earnings estimates (rising) reconciled by corporate results that inspire the former to catch up with the latter.

But while things feel similar on the surface, a big distinction between April 2025 and 2026 lies in what’s expected from Corporate America — and how little that’s mattered to traders lately.

• Last year, S&P 500 12-month forward earnings estimates had started to roll over as analysts began to incorporate their views on how tariffs would weigh on profitability.
• By contrast, FactSet Senior Earnings Analyst John Butters found**** that the share of S&P 500 companies issuing positive earnings-per-share guidance this quarter is the highest since Q3 2021, when the economic reopening from the pandemic was kicking into an even higher gear.
• Zooming out to 12-month forward earnings revisions, there are two standout sectors that have seen profit estimates soar since the end of 2025: energy and tech.
• The Mideast war is behind the positive outlook for energy companies’ bottom lines. The relative performance of the Energy Select Sector SPDR Fund versus the SPDR S&P 500 ETF typically tracks whatever crude oil futures have been doing. In a nutshell, oil determines whether energy stocks are winners or losers, as this chart shows.

The Takeaway

As for tech, Kawa wrote that traders’ “that don’t impress me much” attitude toward tech profits predates US strikes against Iran. Despite tech companies handily besting profit expectations last reporting period, their stocks tended to fall thereafter. 

The medium-term outlook for return on AI investments, which will both govern the longevity of the boom for chip companies and also inform how quickly most hyperscalers can get back to generating ever-growing billions in free cash flow, has resulted in a much more cautious stance and pick-your-spots approach for the theme in 2026 versus 2025, but as Goldman Sachs spotlights how tech valuations have gotten more attractive, this may be the quarter that changes.