Stronger Q1 earnings anticipated, along with typical unexpected results.

There is currently no indication of an “earnings recession,” and first-quarter corporate results are expected to show continued strength, with earnings surprises considered a normal pattern. In the fourth quarter, S&P 500 earnings increased at an annualized rate of 14.1%, while analysts are projecting roughly 14% growth for the first quarter.

On the labor front, ADP reported 62,000 private-sector jobs were added in March, exceeding economists’ forecast of 40,000. The increase was partly driven by the resolution of the Kaiser healthcare strike and improved weather conditions that supported construction hiring. However, manufacturing employment declined by 11,000, while trade, transportation, and utilities saw the largest losses, totaling 58,000 jobs.

Retail activity also provided positive signals for growth, with the Commerce Department reporting a 0.6% rise in February retail sales, slightly above expectations of 0.5%. Auto sales increased by 1.2%, suggesting stronger demand for durable goods, and gains were recorded in 10 of 13 retail categories.

Consumer sentiment also improved modestly, as the Conference Board’s index rose to 91.8 in March from 91 in February. The present situation sub-index increased significantly, while the expectations component slipped slightly. The improvement in sentiment was likely supported by better weather conditions during the month.

On the geopolitical front, President Trump is expected to address the nation, following remarks from both him and Secretary of State Marco Rubio suggesting that an end to the conflict may be approaching. Trump indicated that U.S. forces could begin withdrawing within a few weeks.

However, risks remain around the Strait of Hormuz, where shipping conditions are still unstable despite an increase in traffic. Recent attacks, including one targeting a Kuwaiti oil tanker, highlight ongoing tensions. U.S. Defense Secretary Pete Hegseth emphasized the need for allied nations to help secure and reopen the waterway. The UAE is reportedly preparing to support efforts to restore access, including pursuing a UN Security Council resolution.

Overall, there is an expectation that the administration is seeking to reduce crude oil prices by stabilizing the Strait of Hormuz. Ensuring the resumption of fertilizer shipments through the passage is also seen as critical, given its importance for agricultural productivity and food price stability during the planting season.

Sources: Louis Navellier