Chart of the Week

Earnings breadth still improving

May 5, 2026

Time to Read: 3 mins

Rising earnings estimates continue to support equities despite geopolitical and macroeconomic uncertainty. With profit growth broadening across S&P 500 industries, resilient corporate earnings underpin our constructive outlook for the stock market.

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Expectations for future earnings growth remain a key driver of equity market performance. That dynamic is especially visible today: rising earnings estimates have supported equities despite persistent concerns over the war in the Middle East and its potential effects on energy prices, inflation and global growth. Consensus forecasts now call for S&P 500 earnings to grow 20.6% in 2026, up from 14.3% before the conflict began — a meaningful upward revision that highlights companies’ profit resilience.

Earnings strength is becoming broader, with more industries expected to post stronger results. Notably, 88% of S&P 500 companies now have earnings estimates higher than their levels 12 months ago — the highest share in three years. That widening earnings breadth supports a more durable market backdrop.

In fact, earnings and interest rates are the main drivers of equity returns. With interest rates on hold, it’s corporate profitability across a wide range of industries that continues to support our constructive outlook for equities.

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Inflation is a global problem

Resilient economic growth, sticky inflation driven by higher energy prices and continued geopolitical uncertainty are complicating the path back to central-bank price targets. We believe policymakers are likely to adopt a tightening bias but remain data dependent.

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A good outlook for global earnings

Global earnings growth has been strong this year, led by the U.S. and reinforced by improving profit growth across Europe, Japan and other major markets. While volatility may rise in the near term, above-average earnings and broader global participation remain supportive of global equities.

Chart of the Week | Macroeconomic

In a real regime shift?

Higher inflation has been a dominant theme of the current decade. In addition to price shocks, it is being shaped by secular investment trends in infrastructure, defense spending, onshoring and the ongoing AI buildout. These structural changes reinforce the case for looking beyond traditional 60/40 portfolios to include real assets as a source of diversification and return potential in portfolios.

Chart of the Week | Macroeconomic

Getting real with real assets

Inflation appears to have transitioned from its pre-Covid average of 2% to a stickier point closer to 3%, and we do not expect a near-term return to prior levels. In this environment, we believe real assets, such as commodities, infrastructure and REITs, can provide inflation protection, diversification and return potential.