Wall Street Eyes Earnings Over Tariffs: 3 Big Themes That Could Drive The Market Next

The second-quarter earnings season is expected to shift the focus of Wall Street from the ongoing trade war to the real-world impacts of corporate earnings.

What Happened: The trade war, which has been a major concern for investors, is no longer the primary focus as the second-quarter earnings season begins. The main concern now is the potential impact of consumer spending on corporate earnings due to the tariffs, reported Axios.

Estimates of earnings growth for the quarter have significantly dropped, from 13% in the previous quarter to 4.8%. This is the lowest projected year-over-year growth since 2023. “I don’t want to say companies get a pass, but I think … you have a lower bar right across the board,” said Michael Hans, Chief Investment Officer at Citizens.

Despite the ongoing changes in tariff policy making it challenging for companies to predict their impact, low earnings expectations could result in stock surges. Max Kettner at HSBC noted that some investors view such pops as “artificial,” but he believes strong earnings this quarter will yield real profits.

According to strategist inputs reported by the publication, three other key themes that could shape this cycle.

Firstly, corporate resilience, signaled by strong forward guidance and increased capital spending. Secondly, the expansion of AI adoption beyond the tech sector, potentially driving broader earnings growth; and thirdly a weakening U.S. dollar, which can boost profits from international revenue by improving currency conversion.

Investors are already looking ahead to 2026, according to David Kostin at Goldman Sachs, indicating they’re ready to look beyond the impact of this year’s tariff policies.

SEE ALSO: Why Are Bitcoin, Ethereum, XRP, Dogecoin Suddenly Skyrocketing? – Benzinga

Why It Matters: The shift in focus from the trade war to corporate earnings comes in the wake of a strong start to the earnings season for banks. Despite concerns about guidance and margin pressure, the banks reported blowout numbers for the second quarter.

Investors have been able to brush off President Donald Trump‘s tariff threats and push stocks to new heights this year, thanks to robust corporate profits. However, the forthcoming earnings season could still bring the trade war back into the spotlight.

As the earnings season unfolds, the performance of major corporations will provide a clearer picture of the trade war’s impact on the economy and the resilience of these companies.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.