The US stock earnings season kicks off amid the turmoil of Middle East conflicts! The profitability of banks, technology, and consumer sectors will determine the fate of the bull market.

Global stock market investors will actively seek evidence in the coming week to assess whether the profit expansion engine of American companies - especially the Wall Street large banks that dominate the S&P 500 index, the large tech giants closely associated with AI, and the retail leaders with their "profit super engine" - is still running smoothly; and closely monitor a new round of Middle East geopolitical wars and the resulting surge in energy costs to see if it poses a significant threat to the optimistic outlook for corporate profit growth. The first quarter earnings season for US stocks will kick off with the release of performance reports from key Wall Street institutions such as Goldman Sachs, JPMorgan Chase, and Bank of America. The strong optimistic expectations for profit growth, which support the bullish outlook for the US and global stock markets, continue even as the Middle East geopolitical conflicts have been escalating over the past month and amidst the market euphoria following a two-week ceasefire agreement. The core logic driving the current bullish tone in the US stock market can be described as a dual-driver of "fundamental growth resilience + fund replenishment." On one hand, the upcoming earnings season will verify whether the corporate profit engine is still running at high speed, with Wall Street analysts generally expecting a year-on-year increase of about 14% in earnings for the first quarter of the S&P 500, marking the potential for a sixth consecutive quarter of double-digit growth and an upward revision of the full-year profit growth rate from around 15% in late February to over 19% in 2026, with the tech sector of the US stock market expected to contribute over 40% of earnings growth. On the other hand, Goldman Sachs' trading department model shows that after large-scale selling of around $48 billion in S&P 500 futures by CTAs in the past month, systemic funds are preparing to become net buyers; even in a sideways market, potential buying pressure in the coming week could reach around $45 billion, representing a record level of short-term fund inflow. This means that the next phase of the US stock market's upward movement does not solely depend on the "ceasefire" good news itself, but on whether the earnings reports can prove that the war has not eroded profits, and whether systemic funds will further mechanize and amplify the rebound. If the performance and guidance of US-listed companies such as large Wall Street banks, Netflix, Johnson & Johnson, AMD, TSMC, and Pepsi continue to show that corporate profits, consumption, and lending activities have not significantly deteriorated, then the market may view the Middle East conflict more as external noise rather than a fundamental turning point that threatens the bull market foundation. Conversely, if listed companies, especially tech companies, begin to lower their future guidance, and large commercial banks reveal a slowdown in consumption and weakening loan demand, or if American companies clearly feel the impact of oil price shocks eroding profit margins, then the current rally driven by "profit optimism + fast money from CTAs" could quickly lose traction - this is a typical risky asset bull market framework of "profit first, liquidity amplification later." Recent improvements in market conditions, a decline in volatility, the S&P 500 breaking through the 50-day moving average, and the VIX dropping to around 20, are all creating conditions for CTAs, volatility target funds, and some individual investors to re-enter the market; but the vulnerabilities of such a rally are also clear - it highly depends on volatility continuing to decline, oil prices not surging significantly again, and corporate management maintaining an optimistic stance. In other words, the sustainability of the rally in the US stock market in the coming weeks will largely depend on two questions: whether profit expectations can continue to hold the upward trend, and whether systemic buying can upgrade the "technical repair" to a "trend-based upward movement." US-Iran talks have failed, can the profit engine sustain the bullish tone of the US stock market The latest round of talks between the US and Iran has broken down and oil prices remain well above pre-conflict levels, with multiple clear signs indicating that global inflation is heating up and the expectation of "Higher-for-Longer" inflation is becoming increasingly difficult to ignore. The trajectory of the stock and bond markets, which had been increasingly optimistic due to the two-week ceasefire between the US and Iran, is facing a major test. "The reason why the market remains so resilient and the bullish trajectory of the US stock market continues to actively rise is mainly because the profit expectations of the US stock market are continuing to be revised upwards. So far, the war has not had any negative impact on the fundamentals," said Nick Giorgi, Chief Stock Strategist at Alpine Macro. "If you start to see some negative chain reactions in the fundamentals, then all bets will be off." Last week, the bullish sentiment surrounding the easing of geopolitical tensions strongly supported the stock market, as the US and Iran had reached a two-week ceasefire agreement, reached after US President Donald Trump had threatened to escalate the war significantly. However, after the US-Iran peace agreement was not reached over the weekend and talks were temporarily declared over, investors were now most concerned about: the longer duration of elevated traditional energy costs near historic highs and the potential pressure that this might put on prices, potentially shattering expectations for a new round of the "double bull market" trajectory for the stock and bond markets. "The markets in general are eager to learn more about how large publicly traded US companies will address the spillover effects of soaring oil prices; rising oil prices will inevitably increase costs for a range of companies and squeeze consumer spending. Even as oil prices have fallen somewhat after the ceasefire agreement, US crude oil has risen by about 70% so far this year. Overall annual profit forecasts have become even more optimistic. Analysts estimated that earnings of S&P 500 component stocks would grow by about 14% compared to the same period last year. According to Mark Hackett, Chief Market Strategist at Nationwide, this would be a sixth consecutive quarter of double-digit growth, and the longest since 2011. Garrett Melson, Portfolio Strategist at Natixis Investment Managers Solutions, said, "The stakes are quite high as we approach this earnings season." Beneath the surface, there is a significant divergence in expectations among the 11 sectors of the S&P 500. According to detailed data from LSEG IBES, the heavily weighted tech sector is expected to drive earnings growth by over 40%, while earnings for the healthcare sector are expected to decline significantly by 10%. How will the impact of Middle East conflicts and the results of the earnings season affect the bullish trajectory of the US stock market? One focus of market attention in the earnings reports will be on how large US-listed companies assess the ripple effects of surging oil prices; rising oil prices will inevitably increase costs for a range of companies and squeeze consumer spending. Even as oil prices have fallen somewhat after the ceasefire agreement, US crude oil has risen by about 70% so far this year. Overall annual profit forecasts have become even more optimistic. Analysts estimated that earnings of S&P 500 component stocks would grow by about 14% compared to the same period last year. According to Brent Schutte, Chief Investment Officer at Northwestern Mutual Wealth Management Company, "What you will see is whether these future profit expectations can stand firm or will be revised lower. The performance guidance of US companies will therefore be extremely important." Investors generally expect that the earnings reports from the large Wall Street commercial banks will provide a crucial window into observing the health of the economy, while concerns about a slowdown in the labor market already existed before the outbreak of the Middle East conflict. Goldman Sachs will report earnings on Monday, the largest US commercial bank JPMorgan Chase will report on Tuesday, and Wells Fargo and Citigroup will also report on the same day. Other banks will release their earnings later next week. Melson said that the latest comments from these large commercial banks on consumer spending behavior and the recent impact of oil prices on consumer budgets will be crucial. Melson said, "The consumption patterns they observe will be a key factor in determining how substantial the economic slowdown risks are from a consumption perspective." Giorgi said that in the context of more tumultuous geopolitical backgrounds, he would focus on comments related to lending activities. "If the banks indicate that companies are ignoring the geopolitical tensions or that geopolitical tensions have no significant impact, and they still need investment and are still lending, that will be a very positive signal." In addition to next week's earnings reports, investors will also pay attention to a report on US producer prices, an important inflation indicator. Schutte said that oil price shocks typically take time to gradually seep into the economy, so if the war continues, the potential macroeconomic risks posed by rising energy costs will be greater. Schutte said, "The longer this situation lasts...the bigger the potential impact it has on US inflation." From a macroeconomic and market strategy perspective, the next phase of the US stock market's upward movement does not solely depend on the "US-Iran ceasefire good news" itself, but on whether earnings reports prove that the war has not eroded profits, and whether systemic funds will further mechanize and amplify the rebound. The sustainability of the US stock market's bullish tone in the coming weeks, under the prevailing bullish trajectory, depends largely on two questions: whether profit expectations can continue to hold the upward trend and whether systemic buying pressure can upgrade the "technical repair" to a "trend-based upward movement."