JPMorgan strategists report that uncertainty surrounding the Middle East conflict is causing U.S. companies to adopt a cautious tone in their earnings forecasts, despite a strong start to the year. Industries directly impacted by geopolitical tensions—such as airlines, transportation firms, and manufacturers—are particularly hesitant to raise guidance, citing concerns over rising oil prices and prolonged volatility. Conversely, energy producers and chemical companies are emerging as relative winners, benefiting from cost advantages tied to U.S.-based raw materials.

The firm’s analysts, led by Dubravko Lakos-Bujas, note that corporate conservatism stems from fears of escalation, with many embedding conservative assumptions into financial projections. S&P 500 earnings-per-share growth is projected at 18% for 2024, but JPMorgan highlights the risk of investor disappointment if tech giants fail to meet lofty expectations. Renewed optimism around artificial intelligence has overshadowed war-related worries, with markets rebounding to record highs since the conflict began in late February. 36% of S&P 500 companies, representing 42% of the index’s market capitalization, are set to report this week, with most maintaining or raising guidance despite macroeconomic headwinds. While near-term demand and consumer behavior show resilience, strategists emphasize that the broader economic impact of the conflict remains unclear.