US Corporate Earnings Surge At Fastest Rate In Four Years, Defying Trade War Fears - Citigroup (NYSE:C), Amazon.com (NASDAQ:AMZN)

Core Insights - The U.S. corporate sector is experiencing a significant surge in earnings, with the growth rate reaching a four-year high despite trade war concerns [1][2] Earnings Growth - The median year-on-year earnings growth across the Russell 3000 index reached 11% in Q3, up from 6% in the previous quarter, marking the strongest growth since Q3 2021 [2][3] - Six of the eleven sectors in the S&P 500 posted positive average earnings growth in the three months through September, an increase from only two sectors in the previous quarter [3] Sector Performance - Ford Motor Co. indicated that tariffs represent a $2 billion headwind, restricting future investments, while JAKKS Pacific Inc. reported negative impacts on sales and margins due to trade policies [3] - General Motors lowered their 2025 gross tariff expectation to $3.5-$4.5 billion from $4-$5 billion, indicating some adjustment to tariff impacts [4] - Financial sector stocks, including JPMorgan Chase, Goldman Sachs, Wells Fargo, and Citigroup, exceeded Wall Street expectations, showcasing strength in lending, trading, and consumer banking [4] Corporate Adaptation - U.S. corporations have found ways to absorb the impact of tariffs, with predictions of resilient consumer spending as long as employment remains strong [5] - The tech sector is seeing notable profit increases due to the implementation of AI and other technologies, although this has resulted in job losses at companies like Amazon, Meta, and Salesforce [5] Market Concerns - There are concerns about a potential AI stock bubble, with investors questioning the sustainability of current valuations, leading to a selloff in tech and AI-linked stocks despite strong earnings [6] - Warnings of a potential market correction in the next two years suggest a possible 10-20% drawdown in equity markets, as advised by Goldman Sachs and Morgan Stanley CEOs [7] Price Action - Over the past six months, the SPDR S&P 500 ETF Trust climbed 15.09%, while the Invesco QQQ Trust ETF increased by 20.06% [8]