Which US sectors face profit misses?

In markets, expectations are everything. And it is safe to say that right now S&P 500 earnings growth for 2025 has a very good chance of being lower than expected.

- Stephanie Guild

The real question is which sectors are most at risk. Earnings season is just getting into full swing, kicking off with the US banks. So far, 2025 bottom-up earnings growth estimates for the S&P 500 have not changed much from the prior quarter, despite the market's reaction to US President Donald Trump's tariff announcement on April 2 and the resulting spike in recession and inflation fears.

In fact, S&P earnings growth for 2025 is still expected to hit double digits at 11%, seemingly unfettered by recession concerns, even though the Atlanta Fed's GDPNow model is predicting a 2.2% contraction for the first quarter, compared to 2.7% growth in the fourth quarter.

Even when adjusting for the surge in gold imports, the Atlanta Fed forecast still anticipates a growth rate of minus 0.1% for the period. In addition, the Yale Budget Lab estimates that the tariffs implemented as of April 15 will detract from US GDP by 1.1% in 2025. Historically, for every 1% change in quarterly GDP, there is a 4% change in earnings growth, meaning S&P earnings growth could fall by about 4% this year.