Q1 Earnings Season Mired in Uncertainty as Banks Begin Reporting Friday

by Christine Short of Wall Street Horizon, 4/11/25

Key Takeaways

  • S&P 500® EPS growth expected to come in at 7% for Q1, which would be the seventh consecutive quarter of growth

  • Banks unofficially kick off the season when JPMorgan Chase, Wells Fargo and Morgan Stanley release results on Friday

  • Q1 peak earnings season falls between April 28 - May 16

Early Earnings Reports Off to a Rocky Start

Q1 earnings season is about to kick off amidst what some might consider to be the most uncertain environment for US corporations since the COVID-19 pandemic.

S&P 500® companies are expected to post year-over-year (YoY) earnings growth of 7% according to FactSet and, while that is a slight downtick from last week’s estimate of 7.1%, it is still a healthy growth rate, historically speaking.1 However, part of that downturn week-over-week is due to weaker than expected results from early reporters. Of the 20 companies that have reported at this point, only 12 have surpassed Wall Street estimates, resulting in a beat rate of only 60%. This is well below the 5-year beat rate of 77% and the 10-year average of 75%.2 Many of these names are considered bellwethers due to their early reporting status, and their broad representation of sectors (Industrials, Consumer Staples, Technology, Consumer Discretionary), and therefore these early numbers don’t bode well for the season overall.

Will Companies Provide Guidance this Season?

However, we know the Q1 numbers are backwards looking, and what investors really want to know is what future growth looks like. That may get a little murky this earnings season, as US corporations will likely struggle to provide accurate quarterly and yearly outlooks as trade policy continues to fluctuate. Case in point, just hours before the publication of this article the Trump administration amended trade policy once again by placing a 90-day pause on some new tariffs, excluding China which has been raised to 125%.3 It’s difficult to say whether this will help corporations with their Q2 guidance and beyond as no one can guess when the next change will be announced, or what will happen when the 90-day pause is over. The level of uncertainty that companies face hearkens back to the COVID-19 pandemic when several corporations refrained from giving guidance during Q1 2020 earnings calls.4

Could we be facing a quarter of little to no corporate guidance? Or vague guidance at best? As I spoke about on a recent episode of The Wall Street Journal’s Take On The Week podcast, we’re starting to see the beginnings of that trend. Back on March 26, when Dollar Tree reported their Q4 results, CEO Michael Creedon said tariff proposals (at the time) could hit the retailer’s bottom-line by $20M per month. However, the fiscal 2025 guidance they gave did not include the impact of the tariffs, as the company was unclear as to their scope and timing.5

Then there was Delta Airlines which reported Q1 2025 earnings earlier today, April 9. After lowering 2025 revenue expectations last month, to 3 - 4% YoY growth from the 7 - 9% growth expected at the beginning of the year, the company said they were unable to reaffirm that newer guidance figure during their earnings call “given current uncertainty.” The airline went further to say they “will provide an update later in the year as visibility improves.”6

The markets sure seem hopeful that the trade policy proposed on April 2, “Liberation Day,” will not stick. After falling in every session after that announcement, major indices came roaring back briefly on Monday, April 7 when a rumor regarding a 90-day pause on tariffs circulated. The White House quickly debunked that rumor, sending markets back down.7 The same happened on Tuesday, April 8 when President Trump announced on his Truth Social account that he had a “great call” with Han Duck-Soo, the acting president of South Korea, and that China “also wants to make a deal badly.”8 US markets rallied, with the Dow Jones increasing at much as 1400 points, before fizzling out and ending flat on the day. And with the S&P 500 still trading around 19x current consensus earnings for 2025, it seems markets are still eager to price in a solution to tariff uncertainty.9