76% of S&P 500 companies exceed earnings expectations amid economic uncertainty

In the United States, earnings season has shown notably positive results, with 76% of S&P 500 firms exceeding earnings expectations for the quarter. The performance of companies in sectors like healthcare, consumer discretionary, communication services, and technology has driven overall earnings growth. This week is set to see reports from an additional 93 S&P 500 companies, including major players in the technology sector. Despite the challenges posed by a -0.3% decline in GDP and fears of recession, the economy appears resilient, bolstered by encouraging job growth figures from the previous week. Key companies, referred to as the 'Magnificent 7', are critical in influencing earnings growth, and this earnings season, four of these companies are scheduled to announce their quarterly results. The upcoming reports from Microsoft, Meta Platforms, Apple, and Amazon are highly anticipated as they account for a significant portion of the market capitalization of the S&P 500. The earnings growth reflected across various sectors reinforces a broader positive trend, even as economic indicators suggest ongoing challenges in international trade and tariffs. The Federal Reserve's upcoming meeting is another factor to watch, with expectations leaning toward no rate changes due to the better-than-expected jobs report. Analysts highlight that while the GDP report may signal a slight contraction, it does not equate to a recession when viewed alongside job growth trends. The juxtaposition of declining GDP and effective corporate earnings raises questions about the state of the economy, making the situation complex for investors and policymakers alike. Lastly, the Berkshire Hathaway annual meeting, combined with their first-quarter earnings release, was a focal point for investors as Warren Buffett announced significant changes within the company. Overall, while economic indicators present a mixed picture, the robust earnings growth reported this season reflects a strong corporate performance during a turbulent economic period.