What Geopolitics? Earnings Growth to Drive Wall Street ETFs

Market Overview - The global stock market experienced significant volatility due to U.S. President Donald Trump's threats of new protectionist measures against European allies, particularly related to the "Greenland row" and potential duties of 10% to 25% on eight European nations [1] - Tensions eased mid-week after President Trump announced a "framework of a future deal" on Arctic security during a meeting at the World Economic Forum, reducing the immediate threat of a transatlantic trade war [2] - New trade concerns emerged with Canada, as President Trump threatened to impose 100% tariffs over Canada's trade deal with China [3] Earnings Expectations - The Q4 earnings season is showing strong performance, with companies exceeding consensus estimates and providing stable-to-positive outlooks [5] - For Q4 2025, S&P 500 earnings are expected to rise by 8.7% year over year, with revenues increasing by 7.9%, marking the 10th consecutive quarter of positive earnings growth [6] - Total earnings for the 51 S&P 500 companies that have reported Q4 results so far are up 17.2% year over year, with 88.2% beating EPS estimates and 72.5% surpassing revenue expectations [6] Full-Year Outlook - Total S&P 500 earnings are projected to grow by 12.2% in 2026, with a moderation to around 8% when excluding the Tech sector's contribution [7] - Tax incentives and capital expenditure benefits from President Trump's "Big Beautiful Bill" are expected to support earnings growth in 2026, with a projected corporate tax rate reduction of approximately 3% [8] Sector Performance - Earnings momentum is expected to broaden beyond technology stocks, with Q4 earnings projected to increase year over year for 8 of the 16 Zacks sectors, including Aerospace (+63.6%), Technology (+15.3%), and Finance (+18.7%) [9] - All 16 Zacks sectors are anticipated to deliver positive earnings growth in 2026, with nine sectors projected to achieve double-digit growth, including Aerospace (+38.3%), Autos (+22.8%), and Basic Materials (+23.1%) [10] Investment Focus - Investors may consider tracking S&P 500-based exchange-traded funds (ETFs) such as Vanguard S&P 500 ETF (VOO), iShares Core S&P 500 ETF (IVV), and SPDR S&P 500 ETF Trust (SPY) [12] - For growth exposure, investors can look at SPDR Portfolio S&P 500 Growth ETF (SPYG), while SPDR Portfolio S&P 500 Value ETF (SPYV) offers value exposure [12]