Earnings Season in the U.S.: Why One Quarter Can Move Global Risk Appetite
Every three months, a familiar rhythm takes over Wall Street: banks lead off, mega‑caps follow, and within a few weeks investors have repriced not just US stocks but risk assets around the world. In 2026, that rhythm is more powerful than ever, because earnings season is where the AI narrative, the macro story and geopolitics all collide.
Q1 2026 is a case in point. FactSet forecasts that S&P 500 earnings grew by 27.1% year on year in the first quarter, which would make it the strongest earnings growth since Q4 2021 and the sixth consecutive quarter of double-digit EPS gains. Deriv’s earnings preview notes that early results have indeed been year on year strong but emphasises that traders are watching guidance, inflation pressures, oil prices and AI-related capex more closely than the headline beats. Investors want to know not only how corporate America did, but also how management teams are framing the next 12–18 months in a world of elevated geopolitics and high starting valuations.
The spillover is visible in global market updates. A mid-April note from Moneybase describes how “record highs in the US as earnings season lifts sentiment” helped offset weaker trading across Europe, with strong results from US tech and financials buoying global equity benchmarks even as regional indices diverged. Goldman Sachs, in its 2026 global‑stocks outlook, projects 11% returns for global equities over the next 12 months, explicitly tying that forecast to “continued earnings expansion led by US corporates” and a broadening of profit growth beyond the Magnificent Seven.
Earnings season matters for risk appetite through three channels:
Index‑level surprises: When realised EPS comes in significantly above or below expectations, it forces investors to recalibrate fair value for entire sectors and the S&P 500 as a whole. An LSEG survey in January had pencilled in 8.8% Q4 2025 earnings growth, led by technology and supported by improving profits in industrials and financials. If actual numbers diverge, the adjustment shows up quickly in index futures and global ETFs.
Guidance and narrative: As Reuters notes in an April 2026 piece, “earnings fantasies may soon get a harsh reality check” if management commentary undercuts the market’s optimistic growth and rate-cut assumptions. A strong quarter paired with cautious guidance can weigh on multiples; a merely solid quarter with upbeat guidance can extend rallies.
Volatility clustering: Options pricing and positioning around earnings dates can amplify moves. When a few mega‑caps now representing 30–40% of the S&P 500’s value report in the same week, their gaps up or down can drive short‑term volatility not just in US indices but also in global portfolios that benchmark to them.
For global investors, the practical point is that US earnings season is no longer just a US event. With US equities still making up more than 60% of major global indices and AI-linked mega-caps dominating index weight, each reporting season is a recurring stress test of the narratives underpinning risk appetite worldwide