US Corporate Earnings Signal Economy Is Holding Steady

There might be some negative surprises ahead, but the leading stock market benchmark indexes are holding steady.

Wall Street in New York City on April 4, 2025. Samira Bouaou/The Epoch Times

In the absence of major economic data due to the federal government shutdown, Wall Street is turning to corporate earnings for clues—and so far, the results point to a steady economy.

According to data compiled by Bloomberg Intelligence, about 85 percent of S&P 500 companies thus far have reported better-than-expected profits in their third-quarter earnings reports. If this holds, the third-quarter earnings season is on track for the best performance in four years.

While it is still early in the latest earnings season, a plethora of firms have either recorded positive results or raised their guidance amid economic uncertainty and higher tariff-related costs.

Revenues for American Airlines and Southwest Airlines rose year-over-year, and both improved their outlooks for the current quarter.

T-Mobile earnings beat estimates amid robust customer additions, which totaled 2.3 million new clients in the three-month period. The wireless carrier also bolstered its full-year guidance, citing an optimistic forecast for new subscribers that could reach 7.4 million.

AT&T also topped subscriber estimates, adding 405,000 more customers than expected.

GE Vernova, General Electric’s energy-focused spin-off, reported a 55 percent increase in orders and a backlog that ballooned to $6.6 billion.

Despite a slow start to 2025, beverage titan Coca-Cola reported earnings and revenues that beat market expectations.

Tesla Motors, which revealed back-to-back revenue declines this year, confirmed a 12 percent jump in third-quarter revenue, although earnings fell short of analysts’ projections.

Corporate earnings can inform economic observers about employment conditions and inflation without relying on the nonfarm payrolls or the consumer price index (CPI) reports, according to Mark Malek, chief investment officer at Siebert Financial.

“And let’s be honest, nothing says ‘America is doing fine’ like a fizzy drink and some Scotch tape,” Malek told The Epoch Times in an email.

“When companies like Coca-Cola and 3M can move markets, it’s a reminder that fundamentals still count, even in a world obsessed with AI chips and crypto. These are the businesses that sit in pantries, garages, and factory floors across the country.”

Traders will now look to upcoming snapshots from major companies, including Visa (Oct. 24), Procter & Gamble (Oct. 25), Mastercard (Oct. 25), Caterpillar (Oct. 25), Meta (Oct. 29), and Apple (Oct. 30).

There might be some negative surprises ahead, but the leading stock market benchmark indexes—the Dow Jones Industrial Average, the Nasdaq Composite Index, and the S&P 500—are holding steady.

Ultimately, according to Malek, the blue-chip Dow Jones is a bellwether of the U.S. economy—and consumers are spending, industrials are pulling their weight, and companies are making money.

The Dow was little changed during the Oct. 23 trading session, while the tech-heavy Nasdaq and broader S&P 500 ticked up by about 0.2 percent.

Bears Versus Bulls

Tom Essaye, president and co-founder of the Sevens Research Report, said that until a vast batch of economic data is released, the bulls and bears will debate on the health of both the financial markets and the broader U.S. economy.

Bears, he noted, will point to sticky inflation, deteriorating employment conditions, fiscal woes, trade and geopolitical uncertainty, and a possible artificial intelligence-fueled bubble.

Despite the three-week-old shutdown, the Bureau of Labor Statistics will publish the September CPI numbers to ensure that the Social Security Administration can calculate cost-of-living adjustments.

Estimates suggest that the annual inflation and core inflation rates will each come in between 3 percent and 3.1 percent. The core CPI strips out volatile energy and food prices.

But the bulls also make a strong case for optimism, according to Essaye.

“On the other hand, bulls make a case for a continued market ascent backed by momentum, rising gross domestic product, sustained earnings growth, strong consumer spending, the start of a Fed rate-cutting cycle, rapidly advancing technologies (e.g., AI), deregulation and stimulus from the ‘One Big Beautiful Bill,’ and almost $8 trillion sitting in MMF [money market funds] as future fuel,” he told The Epoch Times in an email.

The Atlanta Federal Reserve’s GDPNow Model—a running estimate of gross domestic product—suggests that the economy expanded by 3.9 percent in the third quarter.

The Fed is overwhelmingly expected to cut interest rates by a quarter point for the second straight meeting next week, according to the CME FedWatch Tool. Traders are also betting on another quarter-point reduction at the December Federal Open Market Committee policy meeting.

Private-sector alternative measurements indicate that households are still spending. Data from the Bank of America Institute, for example, show that total credit and debit card spending per household rose by 2 percent year-over-year in September.

“Apple pie, Coke fizzing, markets humming, and the data may be dark, but the fundamentals are shining just fine,” Malek said.