Wall Street Horizon

March came in like a lion, much to the bears’ delight. The S&P 500® plunged from its February 19 high on the heels of stern tariff talk and phrases like “a little bit of an adjustment period” from President Trump and the economy entering a “detox period,” as Treasury Secretary Bessent said last week.

Volatility is back in town. Tariff jitters and concerns about growth and inflation have resulted in an S&P 500® dip and the Cboe Volatility Index (VIX) jumping above 20. Investors grapple with a very sanguine backdrop painted by the fourth-quarter earnings season and policy uncertainty.

The fourth quarter 2024 earnings season more-or-less wraps up this week with the final trickle of retailers coming in, as well as the highly anticipated report from Nvidia which was out yesterday afternoon.

Earnings season is winding down, and the spotlight will soon shift toward 2025 trends after an impressive end to last year.

Tech results last week were more anticipated than usual due to the emergence of Chinese AI startup DeepSeek in the prior week.

January is in the books, and markets are still waiting on a big rebound in the dealmaking space. Investors rooting for increased M&A and a flurry of IPOs will have to be patient as Q1 tracks with continued low counts on both fronts.

The Magnificent 7 kicked off fourth quarter reporting in a similar fashion to the Q3 season. Tesla once again missed expectations when they reported on Wednesday, on both the top and bottom-line this time (vs. only missing on revenues in Q3), yet investors seemed unbothered.

Big US banks marked the beginning of the Q4 earnings season when they released results last week, and overall they were positive. Because of their position opening up the earnings season they tend to set the tone for things to come.

Something unusual came down the chimney late last year. During the holidays and the preceding weeks, there were a slew of splits among US ETFs – the most in the past four years, according to Wall Street Horizon’s data.

The same themes that drove sharp 2024 returns among the Magnificent 7 stocks appear to be very much alive in the new year.

The S&P 500 earnings growth rate will likely come in just below the 6% mark for the third quarter.

Uncertainty ahead of the election may have resulted in lower corporate capex and M&A trends, but hope abounds that 2025 could bring about renewed animal spirits.

The Q3 earnings season is coming to a close in its usual fashion, with a word from retailers. With 93% of S&P 500 companies reporting at this point, YoY S&P 500 EPS growth has settled around 5.4%, while revenue growth increased 5.5% for the quarter.

In many ways it didn’t matter what those answers were, just that they were out of the way and investors and US companies could begin to plan accordingly for Q4, 2025 and beyond.