The Latest US Earnings Beat Signal the Best Corporate Performance in Over 4 Years

The US quarterly earnings season is underway, and the proportion of companies posting higher-than-expected results is the highest in over four years. Around 85% of the S&P 500 firms that reported Q3 financial results have surpassed profit forecasts, remaining on track for the best performance since 2021, according to Bloomberg Intelligence data.

While the earnings season is in the early stages, with only a fifth of the S&P 500's market cap having declared Q3 results, the trend might signal that US profits remain robust despite market volatility, tariff threats, and trade wars.

Generally, most of the S&P 500 companies beat expectations. However, this season stands out, given that analysts had set the bar higher by raising estimates heading into the reporting period.

Strong financials and continued investment in artificial intelligence (AI) are potentially balancing threats to stocks from China trade tensions and the ongoing US government shutdown.

'US companies should continue to deliver superior earnings growth supported by a robust AI investment cycle, ongoing deficit spending, and a still resilient consumer,' JPMorgan strategists led by Dubravko Lakos-Bujas wrote in a recent note to clients.

He expects S&P 500 companies to post another quarter of double-digit earnings growth at around 12%. The brokerage has maintained estimates above consensus, which imply a growth of 7.7% in Q3 2025 compared with the quarter in the prior year.

The outperformance can be observed across diverse industries, with Citigroup and Morgan Stanley leading the banking sector. Elsewhere, General Motors lifted its profit guidance on truck sales and potential tariff relief. Furthermore, Coca-Cola also beat expectations on strong consumer demand for its beverages despite rising prices.

The uptrend could indicate market confidence amid the economic data lag due to the US government shutdown, according to State Street Global Markets' Marija Veitmane.

'It is perhaps too early to make strong pronouncements on the health of corporate America, but we note two important trends — larger companies sound upbeat on navigating the current regulatory uncertainty as well as talking confidently about future investments and capex,' Veitmane stated in a note to clients.

The S&P 500 is higher by 15% in 2025, primarily due to the AI boom. Morgan Stanley's Michael Wilson said this week that stocks continue to face risks around trade tensions and slowing earnings revisions, keeping investors cautious in the near term.

In tandem with the positive earnings reports, Gold prices dropped sharply from their record rally. The precious metal continues to extend losses, falling below $4,080 (£3,061) per ounce in recent trading. Analysts believe that the gold rally had run too far, too fast.

'Technical selling has been the main culprit,' said Suki Cooper, head of commodities research at Standard Chartered. 'Prices have been trading in overbought territory since the start of September,' she stated, adding that the bank expected gold to regain momentum next year.

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