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Wolfe Research provided insights into the S&P 500 earnings revisions for the first quarter of 2025. The firm noted that since the beginning of the year, S&P 500 earnings estimates for Q1 2025 have been adjusted downward from $63 to $60, which still represents a year-over-year earnings per share (EPS) growth of 7.2%.
Wolfe Research aligns with the bottom-up consensus S&P 500 EPS estimate for 2025, which is currently at $271, closely matching their own estimate of $270. The downward revisions are attributed to cautious outlooks provided by company managements during the January and February earnings season. Factors influencing these conservative guides include high policy uncertainty and a stronger U.S. dollar at the time.
However, Wolfe Research highlights that the guidance was likely set when the U.S. dollar was at its peak value, prior to growing concerns over U.S. economic growth and before Germany announced significant economic stimulus measures.
Recent weakening of the U.S. dollar is expected to provide some relief for future earnings guidance. Wolfe Research anticipates that the dollar’s weakness will continue as European economic growth expectations may have reached their lowest point, while concerns over U.S. growth remain.
The Federal Reserve’s more dovish stance compared to the European Central Bank’s hawkish approach further supports this outlook.
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