--- title: "The only \"comfort\" in the geopolitical storm: Wall Street still firmly believes in the roaring growth engine of U.S. stocks, with Morgan Stanley expecting S&P 500 earnings to surge by 20%" type: "News" locale: "en" url: "https://longbridge.com/en/news/280473327.md" description: "Despite the impact of the Middle East conflict on global markets, Wall Street remains optimistic about the growth prospects of U.S. stocks. Morgan Stanley expects S&P 500 earnings to grow by 20% over the next 12 months. Analysts have raised their earnings forecasts, believing that corporate earnings prospects continue to improve, despite rising geopolitical risks. Historical data shows that when analysts raise earnings expectations, U.S. stocks typically perform strongly in the following period. Barclays has also raised its year-end target and earnings expectations for the S&P 500" datetime: "2026-03-25T12:33:43.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/280473327.md) - [en](https://longbridge.com/en/news/280473327.md) - [zh-HK](https://longbridge.com/zh-HK/news/280473327.md) --- > Supported Languages: [简体中文](https://longbridge.com/zh-CN/news/280473327.md) | [繁體中文](https://longbridge.com/zh-HK/news/280473327.md) # The only "comfort" in the geopolitical storm: Wall Street still firmly believes in the roaring growth engine of U.S. stocks, with Morgan Stanley expecting S&P 500 earnings to surge by 20% According to Zhitong Finance APP, despite the turmoil in the Middle East affecting global markets this month, some investors still find solace in the growth engine of American companies—this engine is not only intact but also showing vigorous momentum. Currently, Wall Street sell-side strategists are raising their earnings expectations, ignoring concerns about soaring oil prices and potential consumer demand setbacks. Data compiled by Morgan Stanley indicates that earnings for the S&P 500 index are expected to grow by 20% over the next 12 months. Historically, this reading has only been higher than the current level when the U.S. economy emerges from a recession. Mike Wilson, Chief Investment Officer and Chief U.S. Equity Strategist at Morgan Stanley, stated in a client report on March 23: "This supports our judgment—that the likelihood of this round of rising oil prices ending the economic cycle remains very low." The optimistic outlook for corporate earnings—one of the core pillars of the U.S. stock market bull run for most of the past decade—partly explains the resilience of the S&P 500 index amid escalating conflicts in the Middle East. Despite rising geopolitical risks, industry transformations brought by artificial intelligence (AI), and emerging pressures in private credit, this perspective still provides bulls with reasons to hold onto U.S. stocks. ![image.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20260325/1774441747999556.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) Wilson pointed out that the earnings outlook for S&P 500 constituent companies continues to improve, while stock prices are declining simultaneously—this phenomenon is extremely rare during periods of geopolitical uncertainty. Historical experience shows that investors willing to overlook short-term pain often reap rewards. Data from the institution indicates that phases where analysts raise earnings expectations while the S&P 500 index declines typically precede strong performances in U.S. stocks. Related compiled data shows that analysts expect earnings for S&P 500 constituent companies to grow by 11.9% in the first quarter of this year, up from 10.9% before the outbreak of the Iran conflict. Data organized by strategist Wendy Soong indicates that earnings and revenue expectations for the next three quarters have been raised by 1.9% and 1.5%, respectively, partly due to the continued fading of tariff impacts. Other institutions on Wall Street are also seeking solace in corporate earnings for the outlook of U.S. stocks. Barclays raised its year-end target and earnings expectations for the S&P 500 index on Tuesday, citing a strong U.S. economy and impressive performance from tech stocks. However, the optimistic outlook is not without risks. Data from JPMorgan indicates that if oil prices remain at $110 per barrel for the remainder of the year, earnings expectations for S&P 500 constituent companies could decline by as much as 5 percentage points. In three weeks, as major banks begin to disclose their earnings, the first key milestone for the earnings season will officially commence, which will test analysts' optimistic sentiments. If high energy costs persist, they may squeeze consumer spending and erode corporate profits, making current expectations seem overly optimistic. Garrett Melson, a portfolio strategist at Natixis Investment Managers Solutions, stated that during periods of significant uncertainty, earnings expectations often lag. He pointed out that even if Trump's comprehensive tax increases in 2025 lead to a stock market crash, analysts' actions to lower expectations in April of that year were still slow "Any uncertainty shock will lead to this situation," he said, "it takes time for the shock to transmit to earnings expectations." Recently, the conflict in the Middle East has continued to escalate with no signs of easing, and market pressure is steadily building. Investors have been hoping that Trump would ease the conflict to curb further declines in risk assets. On Tuesday, Trump stated that he is negotiating with Iran and claimed to have received a "great gift" from Iran, but at the same time, he is sending more troops to the Middle East. Brad Conger, Chief Investment Officer of Hirtle Callaghan, said: "The market will eventually stop reacting to verbal statements and will focus on economic impacts—there are many disruptions in the supply chain. When companies start saying 'we have to adjust production, cut output, or raise prices,' that is when companies admit that the conflict is having a real impact, and I believe Trump's significance will decline." ### Related Stocks - [Vanguard S&P 500 ETF (VOO.US)](https://longbridge.com/en/quote/VOO.US.md) - [iShares Russell 1000 Growth ETF (IWF.US)](https://longbridge.com/en/quote/IWF.US.md) - [iShares Core S&P 500 ETF (IVV.US)](https://longbridge.com/en/quote/IVV.US.md) - [Vanguard Growth ETF (VUG.US)](https://longbridge.com/en/quote/VUG.US.md) - [Schwab US Large-Cap Growth ETF™ (SCHG.US)](https://longbridge.com/en/quote/SCHG.US.md) - [iShares US Broker-Dealers&Secs Exchs ETF (IAI.US)](https://longbridge.com/en/quote/IAI.US.md) - [iShares Core S&P US Growth ETF (IUSG.US)](https://longbridge.com/en/quote/IUSG.US.md) - [S&P 500 (.SPX.US)](https://longbridge.com/en/quote/.SPX.US.md) - [Vanguard Mega Cap Growth ETF (MGK.US)](https://longbridge.com/en/quote/MGK.US.md) - [Fidelity MSCI Financials ETF (FNCL.US)](https://longbridge.com/en/quote/FNCL.US.md) - [The Financial Select Sector SPDR® ETF (XLF.US)](https://longbridge.com/en/quote/XLF.US.md) - [Vanguard Value ETF (VTV.US)](https://longbridge.com/en/quote/VTV.US.md) - [Vanguard Financials ETF (VFH.US)](https://longbridge.com/en/quote/VFH.US.md) - [Direxion Daily S&P500® Bull 3X ETF (SPXL.US)](https://longbridge.com/en/quote/SPXL.US.md) - [SPDR® S&P 500® ETF (SPY.US)](https://longbridge.com/en/quote/SPY.US.md) - [Morgan Stanley (MS.US)](https://longbridge.com/en/quote/MS.US.md) ## Related News & Research - [How 0DTE Options Can Explain Market Movement](https://longbridge.com/en/news/280360642.md) - [Is the S&P 500 Headed for a Correction?](https://longbridge.com/en/news/279745862.md) - [Corporate quarterly reports could become thing of the past under Trump plan](https://longbridge.com/en/news/279937175.md) - [U.S. commercial paper market shrinks in week-Fed](https://longbridge.com/en/news/279827159.md) - [Weak US five-year auction points to shaky investor interest](https://longbridge.com/en/news/280524039.md)