The ongoing geopolitical and macroeconomic headwinds have led to significant stock market volatility. Peace talks between Russia and Ukraine have shown no progress so far, driving global supply disruptions and rising energy and commodity prices. Moreover, inflation peaked at its highest level in four decades. In addition, the March jobs data suggested a tight labor market.
Last week’s U.S. government data revealed that the nation’s economy had contracted 1.4% in the last quarter. The first quarter GDP shrank in stark contrast to last year’s 5.7% economic growth. However, first-quarter corporate earnings have been impressive so far. According to FactSet, the number of S&P 500 companies beating EPS estimates is above the five-year average. Out of the 55% of S&P 500 companies that reported results for the first quarter as of April 29, 80% beat Street EPS estimates, higher than the five-year average of 77%.
