Earnings Season Kicks Off — 2 Charts Hint at the Direction

Wall Street is bracing for a quiet earnings season, with below-average negative preannouncements and rising estimates, according to JPMorgan strategist Mislav Matejka's charts. The upward trend in estimates reflects Q2's economic improvement, particularly Europe's resilient manufacturing rebound despite geopolitical headwinds. 'The estimate rise may reflect genuine fundamental improvements rather than analyst complacency,' Matejka noted. The S&P 500's estimated year-over-year earnings growth for Q2 is 23.3%, surpassing the 5-year average of 16.4% and the 10-year average of 10.3%. If achieved, this would mark the S&P 500's second consecutive quarter of 20%+ growth and the seventh straight quarter of double-digit growth. Energy, Technology, and Materials sectors are leading the charge. Hyperscalers like Amazon are funneling hundreds of billions into hardware, memory chipmakers, power generation, and data center construction. Despite inflation and geopolitical noise, the broader U.S. economy remains stable thanks to consumer resilience. Truist's Keith Lerner called it an 'earnings boom' with estimates rising across large, mid, small caps, and emerging markets. What direction will markets take as earnings season unfolds?