Corporate Earnings Forecasts Face Pressure Amid Economic Uncertainty and Weakening Consumer Demand

Wall Street’s Confidence in S&P 500 Profits Wavers as Trade Tensions Mount

Despite a generally strong economic outlook, Wall Street analysts are steadily lowering their profit expectations for S&P 500 companies, reflecting growing concerns about trade policies and economic uncertainty. According to Bloomberg Intelligence, earnings forecasts have been downgraded more than upgraded for 22 of the past 23 weeks—marking the longest stretch of downward revisions since early 2023.

Tariff Fears Drive Market Uncertainty

This weakening earnings forecast comes at a critical time. The S&P 500 has already declined roughly 8% from its record highs last month, largely due to investor fears over the economic impact of President Donald Trump’s tariff policies. With market valuations still elevated, strong corporate earnings are necessary to sustain investor confidence. Any signs that companies may struggle to meet profit expectations could deepen market pessimism.

Eric Beiley, executive managing director of wealth management at Steward Partners, noted that the recent stock market selloff is signaling to analysts that earnings estimates need to be adjusted downward.

“The earnings outlook is starting to crack,” Beiley said. “This drawdown in stocks is a clear message to sell-side analysts that they need to bring down their annual profit forecasts even further.”

Early Signs of Weakening Earnings Across Sectors

Although the official first-quarter earnings season kicks off on April 11—starting with financial giants like JPMorgan Chase & Co. (JPM)—some companies are already flashing warning signals.

American Airlines Group Inc. (AAL) announced on Tuesday that its first-quarter losses are expected to be nearly twice as large as previously estimated.
Delta Air Lines Inc. slashed its profit outlook by 50% just a day earlier, citing declining demand for air travel.
Major retailers, including Kohl’s Corp., Abercrombie & Fitch Co., and Walmart Inc., have also expressed concerns over weakening consumer spending.

Earnings Growth Expectations Slashed

At the start of 2025, analysts projected S&P 500 earnings to grow by 13%. However, that forecast has already been revised down to 10%, according to Bloomberg Intelligence. Some experts believe these estimates remain too optimistic.

Yung-Yu Ma, chief investment officer at BMO Wealth Management, suggests that analysts may need to adjust their 2025 S&P 500 earnings growth estimates even lower—potentially into the high single digits—as the impact of tariffs further squeezes corporate profit margins.

“There’s still a significant risk of downward revisions,” said Scott Chronert, head of U.S. equity strategy at Citigroup Inc. “As more companies start adjusting their outlook to reflect the impact of trade policies, we could see further cuts in earnings estimates.”

Market Outlook: What’s Next?

With tariffs looming, analysts and investors alike are closely watching upcoming earnings reports and economic data releases. The first quarter results from major banks and corporations will provide critical insight into whether these concerns are fully justified—or if some sectors can weather the storm better than expected.

For now, Wall Street remains on edge, bracing for the possibility that corporate profits—and stock prices—may still have room to fall.