Guidance is more like guesswork now

Everything we thought was true last week about markets, the economy, and global trade relations has been shattered—and now executives are about to explain their strategy for navigating this brave new world. No pressure!

Big banks kicked off a new earnings season today, and there’s a bunch more reports in the pipeline on Monday (check our calendar down below). Overall, analysts expect first earnings per share across the S&P 500 to rise 7% year over year on average in the first quarter, according to FactSet.

But last quarter isn’t the one investors will be laser-focused on. The real problem is how companies should guide for future quarters—a key component of corporate earnings calls investors and analysts rely on to make decisions.

A sea of question marks

One thing we know for sure is that tariffs, tariffs, and more tariffs will be on executives' minds as they report their quarterly financials. But after a wild week for stocks marked by a series of trade policy flip-flops, corporate executives don’t even know what the baseline tariffs will actually be tomorrow, much less next quarter, much less next year.

On Tuesday, Goldman Sachs chief US equity strategist David Kostin hedged his bets and reduced his full-year earnings growth estimate to 9% from his previous 11% forecast.

But Wall Street has been lowering its expectations for corporate earnings guidance since before Liberation Day. In fact, more companies were issuing negative earnings per share guidance than positive guidance for Q1, and to a greater extent than usual.

The companies that have already reported are setting a bleak tone. Delta Airlines slashed its profit guidance in half on Monday, while American Airlines doubled its first-quarter loss expectations. Some, like Walmart, are just forgoing guidance entirely, a trend that will likely become popular this earnings season as management teams try to figure out the tariff situation.

JPMorgan Chase CEO Jamie Dimon thought that earnings estimates could go even lower. “Analysts have generally reduced their S&P estimate earnings by 5% in recent days,” Dimon said during the bank’s earnings call this morning. “I think you’ll see that come down some more,” he added.

The bottom line: We’re likely to have more questions than answers this earnings season, leaving investors to try and find a signal in all the tariff noise.—LB