By: Gustian Farrow, Head of StoneX TV • Content Channels
Michael Lytle, Chief Investment Officer at StoneX Wealth Management, dissects the latest earnings season and finds a market struggling to price in unusually high uncertainty.
Positive surprise rates “range from mid-50s to high-80s…pretty typical levels”. Yet in consumer-linked and energy sectors the gap between beats and misses has narrowed sharply, hinting at pockets of economic strain. Lytle cautions that these figures are “pre-tariff impact”, so any forthcoming trade measures could amplify stress.
Companies that beat on both EPS and sales earned just “about 70 basis points” of excess return, “almost twice lower than history”. Conversely, a miss triggered a -3.6% swing, worse than the historical -3.2%. “Expectations are just extremely high”, Lytle notes, likening today’s whisper numbers to the 1990s when investors demanded more than published targets.
Turning to forward guidance, Lytle highlights the “lowest” tally of upward revisions since 2013 while downward revisions hit a record: “More than a third of companies have revised guidance down for this year”. He links the spike directly to management commentary: “We are not sure what is coming…we’re pulling guidance altogether”.
The pullback could create “a little more headroom for companies to outperform” if conditions stabilize But the flip side looms large: sustained uncertainty “is going to impact capital decisions…which will impact long-term performance”. Whether the market treats these revision waves as precautionary resets or harbingers of weaker demand will steer equity risk-reward for the rest of 2025.
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---- Written by Gus Farrow
---- Expert: Michael Lytle, Chief Investment Officer, StoneX Wealth Management
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