Early Q1 results show S&P 500 firms beating forecasts, with revenue beats strong despite higher energy costs and other risks. So far, 32 S&P 500 companies have reported.
For these 32 firms, total earnings are up +30.5% year on year on +13.2% higher revenues. Of them, 78.1% beat EPS estimates and 84.4% beat revenue estimates.
Early Season Earnings Strength
In Finance, results are in for 34% of the sector’s S&P 500 market capitalisation. Earnings are up +18.3% on +11.5% higher revenues, with 90% beating EPS estimates and 80% beating revenue estimates.
For Q1 overall, S&P 500 earnings are expected to rise +13.9% on +9.5% higher revenues, combining reported figures and estimates. That compares with +14.1% earnings growth on +9.1% higher revenues in 2025 Q4.
JPMorgan reported earnings up +12.6% on +10% higher revenues; net interest income rose +9% and loans grew +11%. Wells Fargo reported earnings up +14.6% on +6.4% higher revenues, with net interest income up +5% and loans up +11%.
The Zacks Investment Banks/Managers industry is expected to deliver +19.7% earnings growth on +10.5% higher revenues. Finance sector Q1 earnings are expected to increase by +26.7% on +9.8% higher revenues, after +17.3% on +7.4%.
Sector And Market Implications
Finance accounts for 17.2% of the S&P 500’s expected forward 12-month earnings. Since the start of March, Energy estimates rose and estimates for 8 other sectors also moved higher.
With Q1 earnings starting off so strong, we believe the market’s foundation is more solid than recent sentiment suggests. The high rate of both earnings and revenue beats indicates that corporate health is robust despite ongoing risks. We should consider positioning for further upside in the broader market, perhaps by buying call spreads on the S&P 500 index.
The economy is successfully absorbing higher energy costs, with WTI crude currently trading over $95 a barrel, a significant increase since the start of the year. The latest unemployment data from March 2026 showed the rate holding steady at a low 3.6%, reinforcing the view that consumer and business demand remains resilient. This stability gives us confidence that the positive earnings trend is sustainable.
We have seen the VIX, a key measure of market fear, decline from its highs in March to its current level around 16 as this earnings season has gotten underway. This suggests that traders are becoming less concerned about a significant market downturn in the near term. This lower volatility environment makes strategies like selling cash-secured puts on fundamentally sound companies more attractive.
The Finance sector is a clear leader, with firms like JPMorgan demonstrating impressive loan growth and an overwhelming majority of banks beating profit expectations. Looking back at 2025, the financial sector’s performance was steady but not spectacular, so this current strength could signal the start of a catch-up trade. We see opportunities for bullish directional plays on financial ETFs as more banks report in the coming weeks.
Perhaps the most compelling signal is that analysts are raising their full-year 2026 earnings forecasts across most sectors, even with the geopolitical situation. This is a very powerful indicator that underlying business trends are much stronger than previously modeled. Therefore, we should be cautious about establishing significant short positions, as the fundamental momentum is clearly positive.
