JP Morgan Chase (NYSE:) rose $9 or 4% after reporting their early Friday morning. The House that Jamie Built is seemingly the largest bank in America with the largest breadth across the consumer, corporate and capital markets, commercial banking and wealth management segments.
Given the tariff uncertainty and the potential economic slowdown, and with 1/3rd of the year almost gone, 2025 could be a retrenchment year for the banks. (JPM here.)
If readers get a chance, you should take a minute and read the JPMorgan earnings transcript. It’s 33 pages chock-full of great commentary on the health of the consumer and corporate mindset, as well as thoughts on a recession as the tariff details are ironed out.
Jamie Dimon pulls no punches on the regulatory issues, either.
Dimon has been out front on behalf of JPM (and really the US banking system) for years on speaking against the onerous and costly regulatory burden, which the Treasury Secretary is trying to fix.
The JPMorgan call is a good segue into the S&P 500 earnings since Jamie Dimon did comment on the call about earnings: on page 10 of the Q1 ’25 earnings transcript, Jamie Dimon noted that “but the analyst community has already reduced its earnings estimates for the S&P 500 by 5%.
So it’s now 5% as opposed to up 10%. (Here’s the key quote), “My guess is that’ll be 0% and negative -5% probably next month.”
It doesn’t say whether Dimon is referring to Q1 ’25, Q2 ’25, or full-year 2025 in terms of the S&P 500 EPS estimates.
Here’s the Trend in Q1 ’25 Expected S&P 500 EPS Growth by Sector:
Here’s the Trend in Q2 ’25 Expected EPS Growth by Sector:
Trend in Full-Year Expected S&P 500 EPS Growth by Sector:
Table Source: LSEG “This Week in Earnings” 4/11/2025
Of the three tables above, for the Q1 ’24 expected S&P 500 earnings period, the expected S&P 500 EPS growth rate has declined from 12.2% on January 1 ’25 to 8% on April 11th ’25, for a drop of 420 points or 4.2%;
For the Q2 ’25 earnings period (middle table above), the Q2 ’25 expected S&P 500 EPS growth has fallen from 12% on January 1 ’25 to +9.2% as of April 11th, ’25, for a drop of 280 basis points or 2.8%;
For full-year, 2025 (third table), the drop from January 1 ’25 has been from 14% to 9.8% or 220 basis points or 2.2%.
Jamie Dimon didn’t say where he sourced his earnings data from, or when, so it could be tracked internally at JPMorgan, it could be a Factset number or SPCapital IQ number, or it might be an older LSEG quote.
The real point this blog wants to make to readers is that these above patterns (lower revisions into an earnings quarter and then an upside surprise after ACTUAL earnings begin to get reported) are the standard pattern for S&P 500 earnings estimates over the years.
This blog has cautioned readers on this consistently many times. Ed Yardeni – the dean of the S&P 500 earnings forecasters – calls this the “fish-hook effect”. (Follow the pattern’s math and draw a line through the growth rates, and the line will resemble a backwards fish-hook.)
Jamie Dimon could be referring to this normal pattern, not knowing it’s “the normal pattern”.
So far, the downward revisions, as detailed above, are nothing unusual.
Conclusion
Jamie Dimon is probably one of the top 10 CEO’s in the S&P 500 in the last 20 years. Remember, a lot of “earnings” related commentary gets thrown out into the market frequently, but you have to be careful who is doing it, and whether it’s realistic or not.
Frankly, Q1 ’25 actual S&P 500 EPS and revenue results will probably be ok, i.e. roughly in line with estimates, and after the quarter is all said and done, the “upside surprise” for Q1 ’25 S&P 500 will likely be 2% – 3% higher than the already expected +8% LSEG is expecting today. (See the first table inserted above.)
It’s the 2nd quarter ’25 which will likely feel the very conservative guidance that is expected from S&P 500 members. JPM’s conference call did say that the larger companies within the S&P 500 will likely weather this period better than the smaller companies. (Probably not a surprise to many.)
Q1 ’25 expected revenue growth per LSEG is calling for +4.1% revenue growth when Q1 ’25 has been reported entirely. The S&P 500 revenue growth by quarter averaged 5% in 2024, and looking by quarter, from Q4 ’23 to Q1 ’12, the S&P 500 revenue growth has averaged +4.9%.
Which is more important – S&P 500 revenue growth or EPS growth ? Always revenue growth, since S&P 500 EPS is a direct function of revenue.
Disclaimer: None of this is advice or a recommendation, but only an opinion. Past performance is no guarantee of future results. Investing can and does involve the loss of principal, even for short periods of time. LSEG is the source of all EPS and revenue estimates provided. It’s an occasional reminder, but after the last few weeks and the equity and bond market volatility we’ve seen, readers and all investors should gauge your own comfort with portfolio volatility.
Thanks for reading.