Nearly all the companies in the S&P 500 have said how much profit they made in the first three months of the year, and growth looks to be close to nil. That’s usually a frightening thing for investors because stock prices tend to follow the path of corporate profits over the long term.
So without the parade of earnings reports the past few weeks that were better than expected, the S&P 500 likely would have dropped even more than it has on worries about the escalating U.S.-China trade war. At Marriott International, for example, Stifel analysts raised their forecast for earnings per share this year to $6.16 from $6.09 after the company upped its own outlook. This week has been the first of the year where more Wall Street analysts have raised their forecast for Marriott’s 2019 earnings than cut them.
Much of that, though, rests on the expectation that the United States and China will eventually find a resolution on their trade dispute. The world’s two largest economies have gone back and forth with tariff announcements, and the worry is that the trade war will convince businesses and households to hold off on spending. That would knock down revenue and profits.