| Technology stocks once again led the charge, with semiconductor companies playing a particularly important role in driving market performance. No other sector came close to matching Technology’s gains during the month, which is exactly the type of leadership investors like to see during a healthy bull market. Strong participation from innovative, growth-oriented companies has continued to provide fuel for the broader market rally.
Perhaps most importantly, investors shifted their attention back to what ultimately drives stock prices over the long term: corporate earnings. Over the past year, many market participants worried that tariffs, persistent inflation, and slowing economic growth would negatively impact company profits. Instead, earnings have proven remarkably resilient. This strong earnings backdrop is a major reason the S&P 500 continues to reach new highs despite the steady stream of macroeconomic and geopolitical headlines. In fact, the market’s reaction to global conflicts and economic uncertainty has become increasingly muted compared to just a few months ago, suggesting investors are placing greater emphasis on company fundamentals than headlines.
The most recent S&P 500 earnings season (Q1 2026) significantly exceeded expectations. According to FactSet, as of May 8th, 84% of S&P 500 companies beat earnings-per-share (EPS) estimates, well above the 5-year average of 78% and the 10-year average of 76%. 80% of companies beat revenue estimates, also well above historical averages.
Companies didn’t just beat estimates by a little. Earnings came in 18.2% above analyst estimates on average, compared to a historical average surprise of about 7%. The blended earnings growth rate for the quarter rose from an expected 13.1% at quarter-end to 27.7% as companies reported results. That would mark the strongest year-over-year earnings growth since 2021. |
