Two numbers on Thursday will matter more for your stocks than all the earnings reports
Companies are reporting their strongest earnings growth in years, yet stocks are falling. On Thursday, GDP and core PCE will show how much the market is willing to pay for those earnings. Strong growth can be bad for markets, and one inflation report will offer two truths.
Key points
Corporate earnings are growing at their fastest pace in years, yet the index closed in the red for the second week in a row.
Meta beat estimates for revenue and earnings, yet its stock fell 7%; TSMC lost 9% after reporting record earnings.
The 10-year Treasury yield climbed to 5.36%, its highest level since 2002, changing the rules for valuing stocks.
Thursday’s inflation report will offer two different numbers, each telling the opposite story about the pace of price increases.
The Fed decides on interest rates the day before both key data releases and has no intention of hinting to markets about what comes next.
The best earnings season in years, and still in the red
Imagine your employer gives you a 30% raise, but your bank still lowers your mortgage limit. That’s exactly how investors feel in the U.S. market right now. The S&P 500 is showing 29.5% earnings growth for the third quarter, marking the third quarter in a row with growth above 25%. The Nasdaq 100 is on track for earnings growth of around 45%. The market hasn’t seen numbers this strong in years.
And yet the S&P 500 closed in the red for the second week in a row, down 0.5% to 7 623,68 points. Technology stocks had their worst week since April 2025 in mid-October, falling 7.7%. The market isn’t punishing only disappointments. It’s punishing winners, too.
Meta Platforms $META beat estimates for revenue and earnings, raised its investment outlook, and saw its stock fall 7%. TSMC $TSM reported record earnings and lost 9%. This isn’t anxiety about individual companies; it’s a regime shift. Companies are beating estimates by an average of just 2.1%, compared with the five-year average of 7.5%, and the market is making clear that simply “beating estimates” is no longer enough. The reason isn’t hidden in the financial statements, but in something no CFO can control.