S&P 500 (SPX) earnings are currently more than 50% higher year over year for the quarter, a level seen only in a handful of prior episodes. This surge follows a macro‑relevant earnings collapse, placing the index in the type of post‑crisis snapback historically associated with extended recovery or expansion phases.
In the late 1940s, 2009‑2011 and 2020‑2021, similar index‑level earnings spikes off depressed bases aligned with multi‑year bull or expansionary periods, although the first 1‑3 years often included sharp interim corrections. Those phases combined violent initial rallies with later, choppier mid‑cycle consolidations rather than immediate trend reversals.
Today’s setup again features S&P 500 (SPX) earnings power recovering rapidly from a prior shock, with U.S. large‑cap benchmarks such as SPDR S&P 500 ETF Trust (SPY), iShares Core S&P 500 ETF (IVV) and Vanguard S&P 500 ETF (VOO) directly linked to that trajectory. Broader large‑ and mid‑cap exposure via iShares Russell 1000 ETF (IWB) has historically tracked similar post‑crisis earnings surges.
Across those earlier episodes, the durability of equity strength depended less on the initial percentage rebound and more on policy support and starting valuations. Where monetary and fiscal backdrops remained accommodative and valuations were not already extreme, S&P 500 (SPX) and broader U.S. equity gains tended to persist even after the first explosive phase of earnings growth faded.
Terminology
- 01Earnings collapse: Sharp, macro-driven drop in corporate profits across an index or economy.
- 02Expansion phase: Period of sustained economic and earnings growth following a downturn.
- 03Valuations: Pricing of assets relative to fundamentals like earnings, sales, or cash flow.