American corporate earnings signal best quarter since 2021

Corporations in the US are performing better-than-expected this quarter, with 85% of the S&P firms that have reported so far surpassing earnings forecasts, the highest rate since 2021, according to Bloomberg Intelligence.

JPMorgan strategists expect around 12% corporate earnings growth for the quarter, compared with the consensus estimate of 7.7%, offering reassurance to investors as stock market gains slow.

Strong performances span several industries, with banks like Citigroup and Morgan Stanley beating estimates, General Motors boosting its profit outlook due to strong truck sales, and Coca-Cola performing well despite higher prices.

Analysts say these results support confidence during the temporary lack of economic data caused by the US government shutdown.

However, while the major US banks are performing well, regional banks’ stocks have plunged recently due to major auto suppliers going bankrupt.

Overall, the S&P 500 is up 15% this year. The surge in profits may calm fears that stock valuations driven by AI enthusiasm are becoming excessive.

However, experts note that the strength in corporate earnings contrasts with signs of a weakening job market.