All posts by PARKERYL

The sell-off in stock markets this week brought back recession chatter, but that doesn’t necessarily mean one is coming soon.

A full-blown recession is certainly possible and seems likelier after this week, particularly if spending from more cautious U.S. consumers plummets and prompts employers to lay off workers. But right now, the more likely scenario seems to be weaker growth, according to several economists and market analysts. Rather than firing on all cylinders, the U.S. economy may rise at a lackluster pace instead—which isn’t great news but is far from a panic signal.

“We believe the economy will avoid slipping into recession,” Wells Fargo economists wrote in a research note, pointing to “solid fundamentals” such as healthy household balance sheets as a buffer.

Even so, they noted the economy has already “lost some steam in early 2025,” which, combined with tariff uncertainty and federal government job cuts, could take a toll. 

How Should You Think About the Stock Sell-Off?

The S&P 500 stock index officially fell into a correction—identified as a decline of at least 10% from a recent closing high—on Thursday, as investors grew increasingly concerned about President Trump’s unpredictable tariff announcements. The swiftness of the decline has been noteworthy—the benchmark index was trading at an all-time high just over three weeks ago.

The U.S. stock market rebounded on Friday with its best one-day performance of the year, but it wasn’t enough to keep the S&P 500 from posting a weekly loss for the fourth consecutive week as investors continue to fret about the potential economic consequences of the tariffs.

A steep drop in stock markets is a “classic recipe for a slower pace of spending by the wealthy, who drive household consumption,” Joe Brusuelas, chief economist at the accounting firm RSM US LLP. When stock markets rise, the so-called wealth effect makes upper-income households feel wealthier and thus spend more, giving a boost to the rest of the economy. 

Lower stock prices have the opposite effect, and wealthier households are likely to tamp down their spending this quarter, Brusuelas said. However, the U.S. economy can absorb some slowing without entering an extended contraction.

“The current growth scare is overstated,” Brusuelas said. “My sense here: We’re just seeing a classic late-cycle business slowdown.”

He expects the economy to grow at an annual rate of 1.5% this quarter, weakening from the pace of 2.5% or more in the last few years. But that’s not unusual, he said, noting that growth dipped into negative territory at the start of 2022 before continuing to power through.

Tariffs Could Make Chances of a Recession Greater

The economy also faces risks over the next month as President Donald Trump weighs whether to proceed with tariffs on Canada and Mexico plus impose new reciprocal tariffs on goods from across the globe.

“If there are other tariffs that are put on, then we may need to take a step back and reassess the forecast on growth and consumption,” Brusuelas said, adding that the “waiting is the hardest part.”

For his part, Treasury Secretary Scott Bessent told CNBC on Thursday that he’s “not concerned about a little bit of volatility over three weeks.” The administration’s focus is on improving “the real economy” in the longer term, he said.

Satyam Panday, chief U.S. and Canada economist at S&P Global Ratings, sees a 25% chance of a U.S. recession in the next year as uncertainty takes a bite. 

“There’s an increasing risk that supply-side shocks from tariffs, decelerating immigration growth trends, and curbs on the federal government workforce will create a lasting negative feedback loop,” Panday wrote in a research note. 

The latest jobs report showed U.S. employers added 151,000 jobs in February, and the unemployment rate stayed low at 4.1%. But analysts and investors are increasingly brushing aside data they view as dated and looking ahead at whether they’ll deteriorate soon.

Slower Spending Could Be the Real Concern, Though

In recent surveys, consumers have said they’re feeling less confident about the road ahead. Companies ranging from American Eagle Outfitters to Delta Air Lines have flagged declined spending momentum. 

CEOs had been remarkably bullish after Trump’s election, raising hopes of a corporate investment boom, but that seems to have eased too. In its quarterly survey, the Business Roundtable said its CEO Economic Outlook Index returned to last year’s levels of 84 after rising to 91 following Trump’s victory in November.

“The survey results signal that our members are cautious about the next six months but also see opportunities to improve growth,” said Chuck Robbins, the CEO of Cisco and chair of the Business Roundtable.

A separate survey of economists from the American Bankers Association also cited rising downside risks, but it nonetheless forecasted GDP growth of 2.1% in 2025 and 2026. The group sees a 30% chance of recession this year and next.

“The consensus forecast for positive economic growth and low recession risk is based on the expectation that new tariffs won’t stay in place for all of 2025,” said Luke Tilley, chief economist at Buffalo, New York-based M&T Bank and chair of the ABA’s advisory panel of economists. “The longer the tariffs stay on, the more the risk of recession grows.”

UPDATE—March 15, 2025: This article has been updated with the latest information about the performance of the stock market.

The Senate passed a bill Friday funding the federal government through September, averting a government shutdown.

Senators voted 62-38, with 10 Democrats joining Republicans to put the bill over the 60-vote threshold needed to bypass a filibuster. The vote ended the possibility of the government shutting down Saturday after a stopgap funding measure was set to expire. The new stopgap bill then passed on a vote of 54-46. The bill now moves to President Donald Trump’s desk. He is reportedly expected to sign it.

This new bill clears the way for Republican lawmakers to hammer out a new federal budget that includes trillions of dollars in tax cuts.

The vote thwarted an effort by some Democratic lawmakers who had wanted to use a shutdown threat to curtail President Donald Trump’s mass firing of federal workers.

Some Democrats, including Alexandria Ocasio-Cortez, a representative from New York, had urged Senate Democrats to use the threat of a government shutdown as leverage to demand concessions from the majority GOP.

Ocasio-Cortez and other House Democrats, who nearly unanimously voted against the continuing resolution, argued that it empowered Trump and his influential advisor, Elon Musk, to continue their campaign of firing federal workers and canceling government grants and contracts, bypassing the authority of Congress to control the government’s spending levels.

The fizzling out of the shutdown confrontation removes one X-factor from a federal policy outlook full of uncertainty amid Trump’s rapidly changing trade efforts.

Update, March 15, 2025: This article has been updated to include the passage of the bill.

The stock market has been stuck on a roller coaster for months now, zooming up and down ever since November’s U.S. presidential election. 

But over the past few weeks, stocks have been experiencing a particularly painful rout, with the S&P 500 crashing more than 10%, the Nasdaq falling about 15%, and the Russell 2000 collapsing nearly 20%.

But amid this Wall Street chaos, we see a fantastic buying opportunity unfolding. 

In fact, we think stocks may have bottomed this past week – and they could soar from here over the coming months. 

There are four critical tenets to our bull thesis… 

The Stock Market Is Washed Out, But the Economy Isn’t

First, things feel washed out. 

As we mentioned, the major indices have taken a plunge, dropping between 10% and 20%. All three have now fallen into oversold territory. 

Meanwhile, valuations on a lot of individual stocks have dropped to 2- or 5-year lows. The University of Michigan’s Consumer Sentiment Index has crashed to one of its lowest levels in the last 50 years. And investor sentiment in the American Association of Individual Investors’ (AAII) weekly survey has only been this consistently bearish once before – back in March 2009. 

Across the board, things are just really washed out. When conditions are this dour, stocks can rebound furiously as they climb the proverbial ‘wall of worry.’ 

Second, the economic reality is not so bleak. 

We understand Americans’ concerns about tariffs, federal spending cuts, policy uncertainty, and their potential impacts on consumer spending and business investment.

But as of now, at least, those impacts are still contained. 

As we noted in yesterday’s issue, U.S. gross domestic product (GDP) growth is still positive at 2.3%. Consumer spending is steady. Unemployment is low at 4.1%. Inflation is falling, currently hovering around 2.8%. At about 4.3%, according to the Federal Reserve Bank of Atlanta, wage growth is strong and running above inflation. And as the fourth-quarter earnings season illustrated, corporate profits are still growing, with more than 75% of the S&P 500 exceeding consensus estimates. 

So… sentiment and market conditions are washed out, but the economy is not. This divergence is not sustainable. 

Either the economy becomes just as washed out, or sentiment and market conditions rebound. We don’t see the economy nose-diving anytime soon, and therefore, we think a rebound is coming.

Calling the Bottom

Third, multiple technical signals suggest this could be the bottom for stocks, as we’ve detailed over the past week. 

The Nasdaq 100 just fell below its 200-day moving average for the first time in a year. Similarly, the S&P 500 dropped below its 250-day moving average for the first time in a year. The market has become oversold, again for the first time in a year. 

All this happened this past week. And historically speaking, when these things have occurred before, the market usually went on to soar over the next 12 months, so long as stocks stabilized around these major technical levels… 

Which also happened this week. 

The S&P 500 fell multiple times toward the ultra-critical 5,500 level and never gave it up. It bounced every time. This past Tuesday, it bounced right above there and then did so again multiple times on Thursday. Then, stocks soared on Friday and – as of this writing – the S&P retook its 250-day moving average. 

Stocks are stabilizing exactly where they should. From a technical perspective, that tells us that the market has found a bottom and that stocks will soar over the next few months.

Another online marketplace is coming soon, this time from a big electronics retailer.

Best Buy (BBY) is joining Amazon.com (AMZN), Walmart (WMT) and other retailers, joining a space estimated to be worth hundreds of billions of dollars in sales. launching a third-party US marketplace management earlier this month said is slated to open this summer. CEO Corie Barry on Best Buy’s latest earnings conference call shared more details about the plan, saying she believes it can attract shoppers and boost profits.

This is the company’s second try at an American marketplace; a first attempt was closed down nearly a decade ago, with media reporting issues with product overlap and minimal revenue. A Canadian marketplace, launched in 2016, has been seen as more successful.

“We believe that as the trusted leader in [consumer electronics] we have an opportunity to leverage our positioning and assets to build a differentiated digital marketplace platform, thereby bringing our customers access to a much more expansive assortment and new categories,” Barry said on the call, according to a transcript provided by AlphaSense.

Barry said the new marketplace will allow Best Buy to give customers more choices without growing its own inventory. Sellers will go through a vetting process, the company said.

Among other details discussed by Best Buy:

• The U.S. marketplace will offer an assortment of new products, while the current Canadian marketplace focuses more on refurbished items. The company said it’s seen demand in Canada for deeper product lineups, which the US version can offer, according to Barry. “Customers are searching our website and looking for a broader selection or looking for a broader quantity of products, and we just don’t have them there for them.”
• US customers will be able to return marketplace items to stores, executives said.
• Eventually, executives said, the company could offer fulfillment to marketplace sellers. “It is still early in the process and we are pleased with the strong interest from sellers and believe it indicates a promising launch,” Barry said.
• Best Buy is partnering with enterprise marketplace company Mirakl on its marketplace launch, which operates its Canadian marketplace.

Best Buy has not publicly shared a launch date. The company did not respond to Investopedia’s request for comment in time for publication.

Shares of Best Buy fell 10% this week and are off about 17% so far this year.

We’ve been talking about quantum computing a lot lately – and rightfully so.

After all, Big Tech is making major investments in it, including Alphabet Inc. (GOOG), Microsoft Corporation (MSFT) and Amazon.com, Inc. (AMZN). They’re developing quantum chips that can perform computations in seconds that would normally take a classic computer thousands of years to complete.

But of all the Big Tech companies, I think NVIDIA Corporation (NVDA) is on the path to becoming the leader, which it will make clear to all the other quantum players next Thursday, March 20, when it hosts its Quantum Day, or “Q Day.”

This is where I predict NVIDIA will make a major announcement. Not only will it cause my No. 1 pick to take off like a rocket, but it will also fuel a fresh rally to help turn the entire market around. (For more details on the event, click here and watch a replay of my summit, The Next 50X NVIDIA Call.)

But the reality is we can’t take our eye off what else is going on in the markets right now.

You see, tariffs have continued to weigh on investors.

On Tuesday, March 4, Trump implemented 25% tariffs on Canada and Mexico, as well as the 20% tariffs on China. That sent the stock market spiraling lower. Even though President Trump backpedaled and postponed some of the tariffs on Canada and Mexico until April, it was too little, too late for many investors. And this week, he placed a 25% tariff on steel and aluminum, and threatened a 200% tariff on alcoholic products from the European Union (EU) if it doesn’t remove the tariff on imported American whiskey.

I know that a lot of investors are rattled by the ongoing “tit for tat” between President Trump and Canada, Mexico, China and Europe.

Obviously, a lot of people in the media aren’t fans of President Trump. And I will acknowledge that he can be a bit erratic. But the ultimate goal of all this is to have free trade.

For example, the European Union charges a 10% tariff on American cars imported into Europe. The U.S., on the other hand, charges 2.5%.

You get the idea.

The fact is this is really up to Commerce Secretary Howard Lutnick.

I know Howard Lutnick – my son went to school with his son, and I think he’s a wonderful guy. He’s going to be a cheerleader for America, and the ultimate goal is to have trillions in onshoring.

This “tit for tat” has certainly weighed on the markets, but thankfully, some positive data mid-week helped bring some investors off the sidelines. I’m talking about the latest Consumer Price Index (CPI) and the Producer Price Index (PPI) reports.

These reports were critical, because investors and consumers alike are beginning to feel pressured by all this tariff talk.

The Federal Reserve is feeling the heat as well. So, in today’s Market 360, let’s take a look at this week’s latest inflation reports and what they mean for future key interest rate cuts. Then, I’ll share more about how you can take advantage of the next investment opportunity that could turn the entire market on its head.

Abbott Laboratories (ABT) shares declined and Reckitt Benckiser shares ended the day lower in London after Reckitt said a state judge ruled plaintiffs could seek a retrial against the infant formula makers.

In October, a jury in Missouri cleared Abbott and Reckitt of liability in a case alleging their infant formula products caused necrotizing enterocolitis (NEC), a disease of the bowels. Abbott manufactures Similac brand formula, and Reckitt owns Mead Johnson. 

“Twelve citizens of the City of St. Louis served on a jury for five weeks, heard all the evidence, including from leading experts, and unanimously found that Abbott’s formula does not cause NEC. Their verdict was correct. It was consistent with the consensus of scientists, governmental regulators, and the neonatologists who treat these vulnerable patients,” a spokesperson for Abbott stated to Investopedia Friday.

“We plan to file an immediate appeal, and we expect that the jury’s verdict will be reinstated,” said Abbott.

Reckitt said the judge’s decision to allow plaintiffs to seek a new trial is “at complete odds with the law and the facts,” in a statement on its website. The company also expressed its intent to appeal. 

The development follows similar cases that brought rulings against the companies earlier in 2024. 

Shares of Abbott slid 2.4% Friday in the U.S., and Reckitt shares closed about 2% lower on the London Stock Exchange. 

The full article continues below these offers from our partners.

Your Safe, Easy Options for a Top Cash Return

To earn a solid interest rate on savings with virtually no risk, your options for safe cash investment come in three main flavors:

1. Bank and credit union products: Savings accounts, money market accounts, and certificates of deposit (CDs)
2. Brokerage and robo-advisor products: Money market funds and cash management accounts
3. U.S. Treasury products: T-bills, notes, and bonds, in addition to I bonds

You can choose just one of these, or mix and match products for different buckets of funds or timelines. In any case, you’ll want to understand what each product pays. Below, we lay out today’s top rates in every category and indicate the change from a week ago.

Today’s Best Rates on Cash

This week saw very minor ups and downs on returns from different cash instruments. The leading high-yield savings account, money market account, and all CD terms but one held steady at their previous top rates. The best 4-year CD return, however, inched up by 5 basis points to 4.40% APY. Meanwhile, the top deposit rate in the nation continues to be Mountain America Credit Union’s 5.00% APY on an 18-month CD.

Among money market funds at the three major brokerages, the yields there slipped—but only by 2 to 3 basis points, with a top rate of 4.24% offered by Vanguard. Rates on brokerage cash management accounts meanwhile held their ground, ranging from 3.83% to 4.00%.

For Treasurys, rates showed little to no movement across durations. The largest change this week was an increase of 4 basis points for 1-year T bills (to 4.09%), while 20-year Treasury bonds continue to offer the highest Treasury return at 4.65%.

In any case, returns in the 4% range are excellent, and the various options below are likely to be a good fit for almost anyone’s cash savings needs and timeline.

Understanding Your Different Cash Options

Bank and Credit Union Products

Savings Accounts

The most basic option is a bank or credit union savings account—sometimes called a high-yield savings account—that lets you add and withdraw money as you please. But don’t assume your primary bank pays a competitive rate. Some banks pay virtually zero interest.

Fortunately, we make shopping for a high rate easy. Our daily ranking of the best high-yield savings accounts gives you 15 options paying 4.35% to 4.60% APY. Note, however, that savings account rates can change at any time.

Money Market Accounts

A money market account is a savings account that adds the ability to write paper checks. If this is a useful feature to you, shop our list of the best money market accounts.

If you don’t need paper check-writing, choose whichever account type—money market or savings—pays the better rate. The top money market account rate is currently 4.50% APY. Again, be aware that money market rates are variable, so they can be lowered without warning.

Certificates of Deposit

A certificate of deposit (CD) is a bank or credit union product with a fixed interest rate that promises a guaranteed return for a set period of time. Generally ranging from 3 months to 5 years, CDs offer a predictable return with a rate that cannot be changed for the duration of the term.

But beware that it’s a commitment with teeth: If you cash in before maturity, your earnings will be dinged with an early withdrawal penalty. Our daily ranking of the best nationwide CDs currently includes options paying up to 5.00% APY.

Brokerage and Robo-Advisor Products

Money Market Funds

Unlike a money market account at a bank, money market funds are mutual funds invested in cash and offered by brokerage and robo-advisor firms. Their yields can fluctuate daily but currently range from 3.98% to 4.24% at the three biggest brokerages.

Cash Management Accounts

For uninvested cash held at a brokerage or robo-advisor, you can have the funds “swept” into a cash management account where it will earn a return. Unlike money market funds, cash management accounts offer a specific interest rate that the brokerage or robo-advisor can adjust whenever it likes. Currently, several popular brokers are paying 3.83% to 4.00% APY on their cash accounts.

U.S. Treasury Products

Treasury Bills, Notes, and Bonds

The U.S. Treasury offers a wide array of short- and long-term bond instruments. Those with the shortest duration are Treasury bills, which range from 4 weeks to 52 weeks, while Treasury notes have a maturity of 2 to 5 years. The longest-term option is a Treasury bond, which has a 20- to 30-year maturity. Today’s rates on the various Treasury products range from 4.00% to 4.65%.

You can buy T-bills, notes, and bonds directly from TreasuryDirect or buy and sell them on the secondary market at brokerages and banks. Selling a Treasury product allows you to exit before the bond matures. However, you may pay a fee or commission for secondary market purchases and sales, while buying and redeeming at TreasuryDirect—the U.S. Treasury’s online platform for buying federal government securities—has no fees.

You can also buy Treasury ETFs, which trade on the market like a stock. Treasury ETFs have advantages and limitations, which you can read about here.

I Bonds

U.S. Treasury I bonds have a rate that’s adjusted every six months to align with inflation trends. You can redeem an I bond anytime after one year or hold it for as long as 30 years. Every six months you own the bond, your rate will change.

How We Find the Best Savings and CD Rates

Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs and savings accounts to customers nationwide and determines daily rankings of the top-paying accounts. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the account’s minimum initial deposit must not exceed $25,000. It also cannot specify a maximum deposit amount that’s below $5,000.

Banks must be available in at least 40 states to qualify as nationally available. And while some credit unions require you to donate to a specific charity or association to become a member if you don’t meet other eligibility criteria (e.g., you don’t live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.

Markets erupt higher… is this rebound real or a temporary?… diagnosing why stocks are falling… the dance between sentiment and earnings… don’t miss Louis Navellier’s 50X small-cap idea

As I write Friday, stocks are ripping higher.

Is this the beginning of a sustained, bullish rebound? Or bullish fool’s gold before the next leg lower?

To help answer this, let’s diagnose the problem.

The market currently has a “sentiment” problem.

The good news is that – at least for the moment – it’s not an “earnings” problem as well. And that should limit how much downside remains in front of us, if there’s any at all.

Let’s break this down.

There are two key variables that influence the price of each stock you own

• The earnings of your underlying companies
• The multiple that investors are willing to pay for those earnings – which we can think of as “investor sentiment”

In the short-run, investor sentiment is unquestionably the greatest influence on stock prices.

On any given day, gleeful or despondent investors can drive stocks to unfathomable heights or depths based on greed and fear.

But in the long run, stock prices always return to their true master: earnings.

To illustrate, check out the chart below that shows us the key drivers of stock performance over various lengths of time.

The column on the left shows us the drivers over one year. “Multiple” (which means “investor sentiment”) is in red; it’s the dominant influence at 46%. Revenue growth (the basis for “earnings”) is in blue; it accounts for just 29% of stock-price performance.

But see how this flips the further out you go (the columns to the right).

Source: Morgan Stanley / The Future Investors

After 10 years, sentiment drives just 5% of stock performance.

For another angle on this, below is a chart dating to 1945 comparing the S&P 500’s price to its trailing 12-month operating earnings.

Notice how over the long-term, these two lines have an amazingly strong correlation. This underscores our point: In the long-run, earnings drive stock prices.

But also, you’ll see how the S&P’s price line (in green) bounces all around the S&P’s much smoother earnings line (in blue).

This is showing us how price – pushed and pulled by sentiment – soars and crashes… yet always returns to the earnings line.

Source: Investment Strategy Group, Bloomberg, S&P Global

So, where are we with this earnings/sentiment dance today?

In recent weeks, the stock market has been tanking largely due to the investor sentiment part of the equation

And this just prompted legendary investor Louis Navellier’s favorite economist, Ed Yardeni, to lower his S&P 500 forecast.

Yardeni has been one of Wall Street’s leading bulls in recent years – which has been the correct call. Today, he remains broadly bullish. To that end, he hasn’t changed his forecast for 2025 earnings, but he’s pulling back on his sentiment multiple.

From MarketWatch:

Yardeni is sticking with his view that S&P 500 companies will earn a combined $285 per share…

But he is blinking on the valuation multiple, now expecting a range of 18 to 20 instead of 18 to 22.

That takes Yardeni’s best-case scenario down to 6,400 from 7,000 (and also his year-end 2026 view down to 7,200 from 8,000). His “worst-case scenario” for the end of 2025 is now down to 5,800.

The good news is that Yardeni’s updated “worst-case scenario” still has the S&P climbing almost 4% from where it trades as I write.

This isn’t to say that Yardeni doesn’t recognize the potential for earnings to take a hit. Here he is, with a warning:

The latest batch of economic indicators released on Monday, Tuesday, and Wednesday supported our resilient economy scenario with subdued inflation.

Nevertheless, we can’t ignore the potential stagflationary impact of the policies that Trump 2.0 is currently implementing haphazardly.

But Goldman Sachs has, in fact, lowered its earnings forecast due to tariff wars

It’s not a drastic reduction, from $268 to $262. For perspective, the broad Wall Street consensus is $270.

Here’s MarketWatch explaining:

[The reduced earnings forecast is] in reaction to Goldman’s economists earlier this week lowering their GDP view on expectations of a 10-percentage-point tariff-rate increase.

The simple math is that every five-percentage-point increase in the tariff rate reduces S&P 500 earnings by 1% to 2%.

The new earnings forecast also took into account elevated uncertainty and tightening financial conditions.

Meanwhile, like Yardeni, Goldman also lowered its sentiment multiple. But again, not by much – from 21.5 to 20.6.

From Goldman:

The headwinds to equity valuations from a spike in uncertainty are typically relatively short lived.

However, an outlook for slower growth suggests lower valuations on a more sustained basis.

But here, too, Goldman sees stocks climbing from here to end of 2025, even after its reduced forecast. It puts the S&P at 6,200 by year-end, which is 11% higher.

So, if earnings are remaining relatively robust in these projections, then might this “sentiment” correction be healthy?

Yes.

At the end of last year, sentiment had reached bullish extremes. That type of enthusiasm is fun, but it’s flimsy and usually doesn’t last for too long.

Below, we look at the S&P 500’s price in light blue compared with the change in the S&P’s forward 12-month earnings estimate dating to 2015.

Notice how price (in this case, our loose proxy for sentiment) had soared far higher than earnings estimates coming into 2025.

Source: FactSet

So far, given that earnings are holding up well, the pullback has reflected waning sentiment – but this has meant that the price/earnings divergence has narrowed to a more reasonable level.

If we want a long-term bull, this is good news. It’s like letting some air out of an overinflated balloon.

But will this pullback remain a relatively mild “sentiment” drawdown or intensify into a “sentiment + earnings” bear?

That’s the question.

After all, a “sentiment” pullback would mean we should be looking for great buying opportunities today. A “sentiment + earnings bear” would suggest a defensive posture.

Here are some numbers on the two scenarios…

MarketWatch found that when stocks fall 10% but don’t enter a recession, buying the S&P (after it has fallen 10%) has delivered gains six months later nearly 90% of the time (using data since 1980).

But if both sentiment and earnings take a hit, resulting in a bear market, the median S&P 500’s peak-to-trough pullback would be a 24% decline.

Let’s return to the question…

Do we need to be prepared for another massive leg lower in stocks due to an earnings collapse?

It doesn’t appear that way currently.

Here’s FactSet, which is the go-to earnings analytics group used by the pros:

For Q2 2025 through Q4 2025, analysts are calling for earnings growth rates of 9.7%, 12.1%, and 11.6%, respectively.

For CY 2025, analysts are predicting (year-over-year) earnings growth of 11.6%.

It’s going to be very hard to have a deep, sustained bear market with that kind of earnings growth.

Meanwhile, FactSet reports that while executives have been discussing tariffs on their earnings calls, they haven’t been mentioning “recession” with any great urgency.

Back to FactSet:

Through Document Search, FactSet searched for the term “recession” in the conference call transcripts of all the S&P 500 companies that conducted earnings conference calls from December 15 through March 6.

Of these companies, 13 cited the term “recession” during their earnings calls for the fourth quarter.

This number is well below the 5-year average of 80 and the 10-year average of 60.

In fact, this quarter marks the lowest number of S&P 500 companies citing “recession” on earnings calls for a quarter since Q1 2018.

But what about the recent GDP reduction that points toward a recession?

To make sure we’re all on the same page, the Atlanta Fed’s GDPNow Tool provides a “nowcast” of the official GDP estimate prior to its release by using a methodology similar to the one used by the U.S. Bureau of Economic Analysis.

As I write, it’s showing a steep contraction of -2.4%.

Source: Atlanta Fed

We need to take this with a big grain of salt.

To explain why, here’s Louis from Wednesday’s Flash Alert podcast in Breakthrough Stocks:

The data doesn’t support us going into a recession.

Now, I’ve mentioned to you folks that the trade surpluses are ridiculous because companies were dumping goods on America.

The first indication was the 34% surge in January. We’ll see what the February trade number will be, but that could cause negative Gross Domestic Product (GDP).

However, according to the Institute of Supply Management (ISM), manufacturing has been growing for two months in a row after contracting for 26 months, and services actually picked up.

The U.S. is a predominantly service-led economy, so the data doesn’t support the narrative that we’re going into a recession.

Circling back to our focus on earnings, Louis is the perfect person to chime in on today’s theme of “sentiment” and “earnings”

After all, as we highlighted in yesterday’s Digest, Louis’ entire approach to the market centers on identifying stocks displaying fundamental strength.

True to form, here’s what Louis said on Wednesday to his subscribers:

I want to reassure you that earnings are working.

I also want to reassure you that when we had this very sharp correction that analysts never cut their estimates…

We’ll keep an eye on everything, and we’ll just keep you in the crème de la crème – the best stocks.

Speaking of crème de la crème, a reminder that Louis just flagged his top quantum computing stock. He believes it has 50X upside potential as quantum computing technologies hits the mainstream (there’s breaking news on this that we’ll feature in Saturday’s Digest – be on the lookout).

Louis also pointed toward a key catalyst happening this coming Thursday – Nvidia Corp.’s (NVDA) “Quantum Day.” Here’s Louis:

Next Thursday,I believe Nvidia will stake its claim in the quantum computing space. And when it does, this little-known top pick could erupt overnight.

Yesterday, I revealed everything you need to know about Q-Day – including details on my No. 1 stock pick that could explode in the wake of NVIDIA’s announcement.

To check out Louis’ full presentation, click here.

Coming full circle…

So, what are we to conclude from all this?

Here’s the quick-and-dirty:

• Our current drawdown is largely “sentiment” driven. At present, that gives the edge to this being a buying opportunity
• Based on current earnings forecasts, it’s unlikely we’ll devolve into an earnings recession, which would usher in a more damaging bear market
• However, tariff wars could change the calculus depending in their severity and duration
• Focusing on the earnings strength of your specific stocks is the best way to avoid unnecessary stress – or kneejerk decisions – in a market climate such as this one.

We’ll keep you updated.

Have a good evening,

Jeff Remsburg