LIVE MARKETS-Earnings look better than expected, despite tariffs

Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

EARNINGS LOOK BETTER THAN EXPECTED, DESPITE TARIFFS

After this week's flood of quarterly reports, we are well over halfway through earnings season, and so far, results look better than expected, especially given the uncertainty created by President Donald Trump’s erratic global tariff policies.

S&P 500 .SPX companies are on track for an 11.2% aggregate increase in earnings for the second quarter vs the same quarter last year, according to LSEG I/B/E/S. That compares to expectations for under 6% growth just a month ago.

The S&P 500 is dropping more than 1% on Friday after Trump announced a new wave of tariffs on exports from dozens of trading partners, highlighting ongoing uncertainty about what the global trade landscape will look like long-term.

Still, over 80% of companies reporting so far have exceeded consensus analyst expectations, the highest beat rate since the third quarter of 2023. That compares to a typical beat rate of 67%, going back to the 1990s.

Companies have delivered those strong results despite the uncertainty caused by Trump's trade policy. Apple AAPL.O late on Thursday gave a quarterly forecast that beat analyst expectations, even as it warned that tariffs would cost the iPhone maker $1.1 billion in the September quarter.

Of course, Wall Street’s heavyweight tech-related companies have delivered outsized earnings gains relative to companies in sectors including the S&P 500 Materials sector .SPLRCM, which is on track for a 2.6% year-over-year drop in earnings. Fueled by the likes of Microsoft MSFT.O, Apple AAPL.O and Nvidia NVDA.O, Tech .SPLRCT is on track for a 22.5% lift in earnings, while Communication Services .SPLRCL is heading for a 43.5% surge in earnings.

Where do these better-than-expected earnings leave the S&P 500 in terms of valuation? Still very expensive. With the S&P 500 trading at record levels this week, the benchmark is valued at about 22.5 times expected earnings, its most expensive valuation since the coronavirus pandemic.

(Noel Randewich)

*****

EARLIER ON LIVE MARKETS:

INDIVIDUAL INVESTORS EXPRESS CONCERNS OVER VALUATIONS - AAII CLICK HERE

FRIDAY'S TERRIBLE, NO GOOD, VERY BAD DATA: PAYROLLS, PMI, UMICH, CONSTRUCTION SPENDING CLICK HERE

U.S. STOCKS TUMBLE IN EARLY TRADE AFTER JOBS DATA, AMAZON RESULTS CLICK HERE

U.S. STOCK FUTURES RED, YIELDS SLIDE, AFTER LATEST JOBS DATA CLICK HERE

EVEN DEALS DON'T BRING MUCH TARIFF CERTAINTY CLICK HERE

PAYROLLS: WHAT TO EXPECT ACROSS ASSETS CLICK HERE

STOXX SET FOR BIGGEST WEEKLY FALL IN FOUR MONTHS CLICK HERE

EUROPE BEFORE THE BELL: TARIFF JOLT CLICK HERE

MORNING BID: 'TARIFFS - USE THIS VERSION, PLEASE' CLICK HERE