Earnings that were supposed to shrink are now expected to grow
In the middle of an earnings season that has quietly rewritten the story of economic recovery, Wall Street reached record heights on Wednesday, led by Twitter's remarkable surge to prices unseen in seven years. What began as a season of braced expectations — analysts forecasting a double-digit decline in corporate profits — has instead revealed a resilience that few anticipated. The market now waits, as it so often does, for a single voice: that of Federal Reserve Chair Jerome Powell, whose words carry the weight of signaling whether this recovery is as real as the numbers suggest.
- Twitter's stock leapt nearly 14% to $68.24 after posting record quarterly revenue of $1.29 billion and earnings that beat analyst forecasts by a meaningful margin.
- What was once projected as a 10.3% decline in S&P 500 earnings has been completely reversed — the new consensus now points to 2.5% growth, a dramatic shift driven by companies outperforming expectations across sectors.
- Under Armour and Lyft joined the wave of positive surprises, amplifying the sense that corporate America is navigating the recovery better than feared.
- The Dow, S&P 500, and Nasdaq all opened at or near record levels, reflecting the cumulative weight of an earnings season that has steadily rebuilt investor confidence.
- All eyes now turn to Jerome Powell, whose remarks on the economic recovery could either validate the market's optimism or introduce new uncertainty about the Fed's next move.
Wall Street opened Wednesday at record levels, carried by an earnings season that has defied the cautious expectations with which it began. The day's most striking performer was Twitter, whose stock climbed nearly 14 percent to $68.24 — a price the company hadn't seen in seven years. The social media platform had reported $1.29 billion in quarterly revenue, a 28 percent year-over-year jump, alongside a net profit of $222.1 million and earnings per share of $0.38, clearing the analyst estimate of $0.31.
Twitter's results were not an isolated story. When the season opened, analysts had projected S&P 500 earnings would contract by more than 10 percent. That forecast has since been turned on its head — the latest consensus now calls for growth of 2.5 percent, a reversal that reflects how broadly corporate performance has exceeded expectations. Under Armour and Lyft added to the momentum with their own better-than-forecast results, pushing their shares higher and contributing to gains across the major indices.
The Dow Jones opened up 0.17 percent at 31,428 points, while the S&P 500 and Nasdaq gained 0.24 and 0.61 percent respectively — all near historic highs. Yet beneath the record numbers, a note of anticipation lingers. Investors are watching Federal Reserve Chair Jerome Powell closely, hoping his remarks will offer clarity on how the central bank reads the recovery. Strong earnings may argue for a more robust rebound than many feared, but the market remains in a careful holding pattern, waiting to hear whether Powell's words confirm what the numbers seem to be saying.
Wall Street opened Wednesday at record levels, buoyed by a wave of corporate earnings that have begun to reshape investor expectations about the quarter ahead. The mood in markets was one of cautious optimism, with traders and analysts watching closely for any signal from Federal Reserve Chair Jerome Powell, whose remarks were expected to shed light on the central bank's view of the economic recovery.
Twitter became the day's standout performer, its stock climbing nearly 14 percent to $68.24—a price not seen in seven years. The social media company had delivered results that exceeded what Wall Street had been bracing for. In the final three months of last year, Twitter generated $1.29 billion in revenue, a jump of 28 percent from the same quarter a year earlier. The company also swung to a net profit of $222.1 million. On a per-share basis, excluding certain items, Twitter earned 38 cents—a beat against the 31 cents analysts had penciled in.
The strength in Twitter's numbers was emblematic of a broader pattern taking shape across the market. When earnings season began, many analysts had braced for contraction. They had projected that companies in the S&P 500 would see profits decline by more than 10 percent in the quarter. But as reports have rolled in, that calculus has shifted dramatically. The latest consensus now calls for earnings growth of 2.5 percent—a complete reversal that speaks to how thoroughly corporate performance has defied the skeptics.
Other companies joined Twitter in delivering surprises. Under Armour and Lyft both posted results that beat forecasts, sending their shares higher as well. The cumulative effect was visible across the major indices. The Dow Jones Industrial Average opened up 0.17 percent, reaching 31,428 points. The S&P 500 gained 0.24 percent, while the Nasdaq climbed 0.61 percent—all at or near record territory.
What happens next may depend heavily on Powell's words. Investors are parsing every comment from Fed officials these days, searching for clues about whether the central bank believes the economy is healing fast enough to warrant any shift in its current policy stance. Strong earnings could embolden those who argue the recovery is more robust than some feared, potentially influencing how aggressively the Fed might eventually move. For now, the market is in a holding pattern—pleased with what companies are reporting, but waiting to hear what the nation's top monetary policymaker has to say about the road ahead.
Citações Notáveis
Analysts had projected S&P 500 earnings would decline by more than 10 percent in the quarter, but that calculus has shifted as reports have rolled in.— Market consensus shift
A Conversa do Hearth Outra perspectiva sobre a história
Why does Powell's speech matter so much right now, when companies are clearly beating expectations?
Because earnings tell you what happened in the past quarter. Powell tells you what the Fed thinks is coming. If he sounds worried about inflation or overheating, it could spook investors even if Twitter just posted great numbers.
So the market is almost nervous despite the good news?
Not nervous exactly. More like cautious. Companies are doing better than expected, which is genuinely good. But investors know the Fed controls interest rates, and rates affect everything—stock valuations, borrowing costs, the whole game. They want to know if Powell thinks this recovery is sustainable or if it's running too hot.
Twitter jumped 14 percent. That's a huge move for one day. What does that tell us?
It tells us the market had been pricing in the possibility of disappointment. When a company beats badly, it means expectations were low. Twitter didn't just meet them—it crushed them. Revenue up 28 percent year-over-year, profit up sharply. That's not a small beat.
And the broader market is at records. Is that because of Twitter, or is Twitter just one piece of something bigger?
Twitter is the headline, but it's one piece. Under Armour, Lyft—they beat too. The real story is that analysts had forecast the S&P 500 would shrink 10 percent this quarter. Now they're saying it'll grow 2.5 percent. That's a complete flip. That's systemic.
What could go wrong from here?
Powell could signal the Fed is getting concerned about inflation or asset bubbles. Or earnings could start missing again. Right now the momentum is real, but it's fragile. It depends on the recovery staying on track and the Fed staying patient.