3-Weeks

With the war with Iran approaching 3-Weeks the major averages continue to lose ground as year to date losses exceed 5%. Since last Friday’s close the S&P 500 slipped 126 points or 1.9%, the NASDAQ lost 457 points or 2.07%, while the DOW dropped 982 points or 2.11%. It’s been said that the first casualty of war is truth. After nearly 20-days of combat there doesn’t appear to be a clear winner as yet. While true that the markets don’t like uncertainty. A look at the performance of the S&P 500 during Iraq wars 1 and 2 shows that the market actually went up both times. During the initial periods of heavy fighting.

Closer to Home

The 4^th quarter S&P 500 earnings reporting season is just about done. The latest data from FactSet Research shows a 5^th consecutive quarter of double digit earnings growth. With a 13.6% gain likely to be the final figure. Revenue growth is expected to come in at a very solid 9.2% for the quarter. Particularly strong results were reported by the technology sector. An analysis of revenue growth showed most sectors met or beat expectations indicating broad based economic participation despite the chicken little crowd calling for recession again, on second thought, I don’t think they ever stopped.

Subject to Revision

Earnings growth for the second quarter of 2026 per FactSet Research currently indicates a sixth consecutive quarter of double digit earnings growth for the S&P 500 with 12.5% expected. Down slightly because of the war. Revenues show a similar pattern with growth expected to be about 8%. Solid numbers to be sure. Definitely subject to downward revision the longer high energy prices persist. Let’s all hope the war ends quickly.

What About Energy Costs?

Oil and natural gas prices have spiked following the start of hostilities February 28^th. Leading to a bifurcated energy market as domestic gas and oil prices haven’t risen anywhere near as much as their global counterparts. The latest data shows:

European Brent Crude: $112.10 per barrel (USD)

West Texas Intermediate (WTI): $98.00 per barrel (USD)

Henry Hub Natural Gas (US benchmark): $3.09 per MMBtu (USD)

TTF Natural Gas (Europe — primary global benchmark equivalent to Henry Hub): $20.90 per MMBtu (USD)

I’ll note here that Natural Gas is the primary energy source for industry. With Europe’s already crippled economy paying nearly 7 times as much as the US. The outlook isn’t positive and grows worse with each passing day at these prices. Asia faces a similar dilemma with the Asian LNG benchmark JKM currently around $22.35/MMBtu. So Asian Gas is even more expensive than Europe. Even though the US is largely insulated from these price shocks thanks to domestic production. The global economy isn’t. If they continue for long enough the mainstream media, economic pundits and the Democrats may yet get the global recession they have been warning about for over a year.

The latest available consensus projections for S&P 500 companies’ earnings and revenues for Q1 2026 (January–March 2026) and Q2 2026 (April–June 2026) come primarily from FactSet’s Earnings Insight reports and related analyses (as of mid-to-late March 2026, with the most recent snapshot around March 20, 2026). These are forward-looking analyst consensus estimates (year-over-year growth rates), as actual results for these quarters have not yet been reported—Q1 2026 earnings season is expected to begin in April 2026, and Q2 in July 2026.

Have a great week I’ll be back on Friday.