Wall Street strategists have a message for investors concerned about the recent drama in Greenland and the flight of American assets: Expect earnings growth to drive the stock market higher this year.
“We have a great backdrop for earnings growth,” Richard Saperstein, chief investment officer at Treasury Partners, told Yahoo Finance on Thursday. He pointed to reduced inflation and an economy that is still creating jobs.
With earnings season underway, analysts expect the S&P 500 (^GSPC) to post year-over-year earnings growth of about 8.3% for the fourth quarter, according to Bloomberg data. Meanwhile, FactSet analysts project growth could exceed 14%, marking the fifth consecutive quarter of double-digit earnings expansion.
Of the 33 S&P 500 companies that reported fourth-quarter results through Jan. 16, 79% beat the average earnings per share estimate, according to FactSet.
BNY Wealth strategists also expect earnings growth of about 14% this year, partly driven by tax incentives and capital spending benefits from President Trump’s “Big Beautiful Bill,” which essentially lowered the corporate tax rate by about 3%.
The bank’s strategists expect earnings contributions to come from sectors other than technology and the “Magnificent Seven” cohort.
“It’s not that concentrated of a market,” Alicia Levine, head of equity and investment strategy at BNY Wealth, said last week during a 2026 outlook roundtable.
“We’re finally getting earnings growth from the rest of the market, and that’s partly what’s driving the market’s cyclical tilt,” he added, pointing to recent outperformance in sectors like Materials (XLB), Industrials (XLI), and Energy (XLE).
Treasury Partners’ Saperstein said his firm’s core position remains in large-cap technology stocks.
“The AI universe, that trend is really one of the main trends driving the economy,” he said.
He also said he would avoid parts of the market affected by President Trump’s proposed policy changes, such as caps on credit card rates or restrictions on institutional home ownership.
Wall Street also anticipates some easing from the Federal Reserve, with a consensus expectation of two rate cuts this year. Strategists expect the central bank to take a more dovish stance once a new Fed chair is named to replace Jerome Powell once his term ends in May.
Read more: How much control does the president have over the Federal Reserve and interest rates?
This could be positive for bonds in the medium term.
“If rates go down… that five- and 10-year duration space in the U.S. Treasury market looks like it’s going to give a good return,” F/m Investments CEO and Chief Investment Officer Alex Morris told Yahoo Finance.
