Q4 Earnings Recap: US Large-Cap is Peerless

Core Insights - The article emphasizes that corporate earnings trends are a more significant driver of stock prices than geopolitical events, particularly in the context of the ongoing war in Iran [1] - The fourth quarter earnings season for 2025 has shown strong results for US large-cap equities, with S&P 500 aggregate earnings exceeding analyst expectations by 6.8% [2][3] Earnings/Revenue Trends - S&P 500 earnings were 6.8% higher than expected, with technology sector earnings surpassing expectations by 7.6% [2] - Revenue also came in 1.8% above analyst expectations, with only consumer staples falling short, indicating overall strong sales performance [3] - Year-over-year earnings growth for the S&P 500 reached 13.6%, while sales growth was at 9.2% [5] Analyst Adjustments - Forward earnings expectations for the S&P 500 have increased in response to positive earnings surprises, indicating analysts' confidence in sustained earnings growth for US large-caps [4] Earnings/Revenue Surprises - The technology sector demonstrated significant growth, with earnings increasing by 32.5% year-over-year, while industrials and materials sectors also showed strong earnings growth of 34.8% and 24.1%, respectively [6] - The energy sector faced negative sales growth due to lower crude oil prices, but still reported positive earnings growth, reflecting efficiency gains [5] Market Comparison - US large-cap equities are positioned uniquely compared to small-cap, European, and Japanese markets, which have shown signs of taking a step back in earnings performance [9][10] - Japan's earnings surprises were mostly positive, but overall consistency remains a concern, while Europe has seen a decline in earnings surprises and revenue growth [10]