Volatility Meets Earnings Season – Q1 2026

Q1 2026 earnings are getting ready to roll in starting with major banks. Are you prepared for the potential whiplash of roiling markets intersecting with the hard deadline of earnings reports?

Market analysts are predicting that information technology and financial services will outperform but health care is likely to underperform in the first quarter of 2026. We’ll dig into the why of those scenarios and give a perspective on how they fit your macro picture.

The Macro Picture

Overall, Q1’s macro picture was generally negative for equities with the S&P 500 and Nasdaq 100 returns going negative while the Russell 2000 put in a tiny positive return of 0.6%.

The biggest story was volatility.

The ongoing Iran/U.S. conflict has thrown a wrench into what was a generally stable market during 2024-2025. Every potential opening or closing of access to those production areas whether via government action or military intervention causes extreme moves in commodity futures (contracts that bet on the future price of raw materials like oil). These extreme moves have had instant impact on the equity prices of any business involved with production or utilizing the raw materials and products that come from those regions. There are also major ripple effects to shipping and overall transportation pricing.

There is no simple way to quantify what the overall impact of the conflict is yet but immense may end up being the right word. As of today, a 2-week ceasefire has been agreed which may disperse volatility in the short-term.

How does this impact earnings?

There is good news and bad news. Let’s do the good news first. Markets have broadly underperformed in Q1. This means companies that are still maintaining solid growth are entering earnings potentially trading below where they should be. This underperformance signals that if they can meet or beat their earnings expectations, they may have a higher upside potential compared to the overall market. This is particularly important for technology and financial services companies.

Financial Services

Analysts are holding expectations that financial services will hit/exceed their Q1 earnings targets, even in the face of the impact from our macro picture. Why is that?

There are two major reasons. The first is that M&A and IPOs have kicked back into full swing after a few years off. This is likely to boost the advisory fees (what banks earn for helping companies merge or go public) short and medium-term for the banks as consolidation grows across AI and energy companies.

The second is that volatility is beneficial for trading desks. Volatility drives trading volumes up as the markets whipsaw back and forth based on shifting expectations. Trading desks sit in the middle, getting paid on every trade.

The unusual factor in play here is the asset classes that are impacted and how much it costs to trade them. Commodities and currencies are more expensive than equities to trade, so when those volumes spike the revenue expectations grow faster than when equities are the chief driver of volume.

Important earnings to watch: JP Morgan Chase and Bank of America

Information Technology

AI infrastructure is the lead story here. Tech continues to have large earnings growth expectations based on the sheer amount of capital being pushed into the development of datacenters, chip fabs, and other infrastructure. This narrative is well-trodden ground at this point but as the AI hyperscalers continue their drumbeat of building more compute capacity, it means fabrication facilities need to be built at the same rate to meet the added demand. Every manufacturer is breaking ground or has broken ground on a record number of projects over the last 2 years and the appetite from their customers and their customers’ customers is only growing. The deployment levels across corporate America are rising as industries continue to find practical applications for either mass-market generative AI or more custom AI models for development.

Important earnings to watch: Nvidia and Advanced Micro Devices

Healthcare

Healthcare is one of two sectors (along with communication services ) expected to underperform in Q1. This is largely because industry-wide cost shifts are squeezing profit margins. The cost of labor is rising across the sector even as healthcare job growth numbers have dominated the overall employment figures from the Bureau of Labor Statistics (BLS) over the last year. Higher labor costs and overall employment in the sector mean that margins are going to take a hit as workers gain leverage over potential employers.

Another reason for the shrinking profit margins is the expiration of enhanced tax credits that were part of the Affordable Care Act. Managed care is stressed and some companies have withdrawn from the Medicare Advantage space which may overly burden the remaining players in that market and further tighten revenue expectations.

Final Notes

Q1 has been marked by some incredible macro volatility but also sector headwinds. The big question will be whether strong sector fundamentals can overcome the macro headwinds as we start Q2. JP Morgan Chase reports on April 14th and will be the first real test of the financial services thesis.

We’ll be tracking earnings as they come in along with the current macro trends. Keep up to date with all of our analysis and news by signing up for our emails.

Here’s a list of announcement dates with related Leveraged & Inverse ETFs, including Single Stock Daily LETFs, week-by-week for 2026’s Q1 earnings season. Significant risk involved.

Earnings dates are subject to change without notice.

S&P 500 Index

S&P 500 High Beta Index

Financials Select Sector Index

Health Care Select Sector Index

Industrials Select Sector Index

Real Estate Select Sector Index

Dow Jones Internet Composite Index

S&P Biotechnology Select Industry Index

NYSE Semiconductor Index

Dow Jones U.S. Select Home Construction Index

NASDAQ 100 Equal Weighted Index

Solactive US AI & Big Data Index

The Indxx Magnificent 7 Index

 Russell 2000^® Index

Technology Select Sector Index

Energy Select Sector Index

Utilities Select Sector Index

S&P Transportation Select Industry FMC Capped Index

S&P Retail Select Industry Index

S&P Oil & Gas Exploration & Production Select Industry Index

S&P Regional Banks Select Industry Index

Dow Jones U.S. Select Aerospace & Defense Index

NYSE FANG+ Index

Single Stock Daily Leveraged & Inverse ETFs