The first three months of 2025 were supposed to be good ones for corporate America. At the end of 2024, analysts were expecting the companies of the S&P 500 to post 11% year-over-year growth for first-quarter earnings. That’s pretty good…and it’s a big reason why the most bullish on Wall Street were calling for the S&P to soar to 7,000 in 2025
But then President Trump started firing off tariff tweets and Wall Street’s strategist-types started penciling in various doomsday scenarios. Analysts cut their estimates in half – down to 7% year-over-year growth. And exactly no one thinks the S&P 500 will hit 7,000 this year…
Now, 7% earnings growth is not terrible. But it is a far cry from 11%. And these earnings revisions – along with falling GDP growth estimates – were a big reason the stock market got jimmywhacked for the last two months. No pearl has gone unclutched.
As of today, 36% of the companies that make up the S&P 500 have reported first-quarter earnings. Of course there could still be surprises, but 36% is a pretty good sample size. And this sample has reported year-over-year earnings growth of 10.1%.
It is highly likely that the final earnings growth will be right around that 10% number. (And FYI, the Mag 7 is now expected to post 14.5% year-over-year earnings growth.)
So if you want to know why the stock market has put together a few pretty good rallies this week, well, there you have it. Corporate America is very good at growing revenue and earnings regardless of the economic backdrop.
This is exactly what the term “American Exceptionalism” refers to.
“Sell America” has been one of the most popular trades over the last couple of weeks. Bank of America says something like $65 billion has been pulled out of the U.S. stock market – to be invested…where?
Sure, President Trump has a knack for ticking off everybody in the entire world, except for his most loyal voting base. But when you buy U.S. stocks, you’re not buying the president. You’re buying a stake in the best-run companies in the world…
Maybe that “Sell America” trade is about to reverse.
Cheers,
Briton Ryle
Chief Investment Strategist
Outsider Club
X/Twitter: https://twitter.com/BritonRyle
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