Middle East Fighting, Oil Swings Cloud Q2 Earnings Start

Middle East fighting and swings in oil prices are complicating the start of the second-quarter earnings season as investors await results from major banks. Estimates tracked by LSEG IBES through last Friday show S&P 500 first-quarter earnings rising roughly 14% year over year.

Estimates through last Friday suggest nearly six consecutive quarters of double-digit profit growth for S&P 500 companies, the longest run since 2011. Market participants are seeking company-level results to confirm whether that profit trend persists amid higher energy costs and risk on trading desks.

Last week’s partial truce between parties in the Middle East lifted risk assets: the S&P 500 climbed more than 3.5%, an MSCI measure of emerging-market stocks gained about 7.4%, and Bitcoin rose nearly 10%. Oil prices eased after earlier spikes in the conflict. West Texas Intermediate futures fell about 13.4% through Friday, and Brent crude traded near $95 a barrel after reaching roughly $112 in March.

U.S. markets, Treasuries and oil reopened at 6 p.m. New York time on Sunday, and early trading in Sydney reflected caution. The U.S. dollar strengthened against major peers. Asian markets moved unevenly on Monday: Japan’s Topix and South Korea’s Kospi pared losses and Taiwan’s Taiex finished higher, while European stocks were down less than 1%. Recent diplomatic steps were treated as pauses rather than final settlements, leaving the risk that negotiations could again unsettle markets.

The corporate and economic calendar is full this week. Monday included Goldman Sachs results, LVMH sales and U.S. existing-home sales. Tuesday featured earnings from JPMorgan Chase, Citigroup and Wells Fargo, along with sales figures from Kering and TotalEnergies, Japan industrial production, U.S. producer-price inflation and the IMF’s world economic outlook. Morgan Stanley and Bank of America reported Wednesday, with Netflix and China GDP data among later releases.

Goldman Sachs opened the reporting stretch with results that beat expectations. The bank reported first-quarter earnings of $17.55 per share versus the $16.49 expected by LSEG and revenue of $17.23 billion compared with an expected $16.97 billion. Net income rose 19% year over year to $5.63 billion, and total revenue increased 14%.

Equities trading produced Goldman’s strongest quarter on record for that business, with equities revenue up 27% to $5.33 billion, about $420 million above estimates. Investment-banking fees rose 48% to $2.84 billion, roughly $340 million above forecasts, while investment-banking revenue fell 10% to $4.01 billion. Goldman reported results were hurt by significantly lower revenue in interest-rate products, mortgages and credit.

Investors will watch whether other banks can match trading and fee gains and whether broader U.S. corporate profits hold up as markets digest this week’s reports and ongoing oil-market swings. If current S&P 500 estimates persist, companies will record a sixth straight quarter of double-digit profit growth.