Why the Hormuz crisis isn’t crushing S&P 500 earnings

In Do Geopolitical Oil Shocks Cause Equity Bear Markets? we argued that oil shocks alone do not cause bear markets — the outcome depends on the macro backdrop when the shock arrives. The question that naturally follows: now that US earnings season is largely complete, has the Hormuz crisis left any mark on corporate earnings? 

In 2022, the Ukraine invasion led to the oil price spiking to US$120/bbl. It occurred at a time when S&P 500 earnings growth was decelerating. The post-COVID surge was losing steam and the economy was entering a quiet manufacturing recession that would last nearly three years. Technology stocks were simultaneously hit by stock-specific earnings downgrades that compounded the market’s pain. The S&P 500 recorded its worst annual return since the 2009 Global Financial Crisis.

Source: FactSet

The 2026 Hormuz crisis also led to an oil spike, but arrived into a very different earnings environment. Coming out of 2025, S&P 500 earnings growth was accelerating. With 89% of the index having reported Q1 2026 results, forward earnings estimates have been revised upward throughout the reporting season. The current S&P 500 next twelve months earnings per share (EPS) growth of 25% is one of the highest on record, trailing only the historic rebounds following the 2009 Global Financial Crisis and the 2020 COVID pandemic.

Technology Leads

The surge in S&P 500 earnings growth has been led by technology stocks, which comprise about 40% of the index. The Nasdaq EPS is running at 38% annual growth. Within the sector, the standout is semiconductors, with EPS surging 132% on the back of hyperscaler capex commitments. Semiconductors alone now account for about 15% of the S&P 500 — more than the Energy, Materials, and Utilities sectors combined — which means the earnings acceleration in chips flows directly through to the aggregate index.

Source: FactSet

Manufacturing recovery

The S&P 500 earnings surge is broader than the technology sector alone. The Russell 2000 small-cap index is also posting improving earnings growth. The reason for this is not hard to find. Small caps have a far greater exposure to the domestic manufacturing and industrial cycle than the large-cap, tech-heavy index, which means their earnings are a direct read on the health of the US goods economy.

From November 2022 through December 2024, the ISM Manufacturing Index was below 50 for 26 consecutive months, the longest contraction on record. This was the post-COVID industrial hangover. Manufacturers overproduced, inventories bloated, and the cycle corrected quietly while the headline economy held up through services and labour markets.

The cycle has now turned. The ISM Manufacturing PMI moved above 50 in January 2026 for the first time in over two years, and has remained in expansion territory since. New orders have expanded for three consecutive months, confirming the recovery has momentum. 

Source: FactSet

In early-cycle recoveries, volumes rise against a largely fixed cost base, producing sharp earnings acceleration for companies linked to the manufacturing cycle. Pent-up operating leverage is now unwinding, and the Russell 2000 is posting annual earnings growth of just under 30% after two years of moribund growth. The earnings of J.B. Hunt Transport Services (JBHT) illustrate this dynamic most vividly.

Source: FactSet

The largest US intermodal and truckload operator, JBHT is one of the most inextricably tied companies to the manufacturing cycle. Trucking companies are the lifeblood of the manufacturing economy, moving raw materials in and finished goods out, which makes their earnings one of the most reliable proxies for the health of the broader economy beyond large-cap technology. The Q1 2026 results bear this out. JBHT posted diluted EPS of $1.49, up 27% from $1.17 a year ago. Intermodal loads hit a first-quarter record, with management characterising demand strength as broad-based. These are not the numbers of an economy being derailed by an oil shock.

Conclusion

In late 1973, the oil shock delivered a killing blow to an economy already contracting and an index dominated by energy-intensive industrials. In early 2022, it arrived as the manufacturing cycle and technology earnings were rolling over. In both cases, the macro was already deteriorating when crude spiked.

In 2026, the oil shock arrived in the middle of a hyperscaler capex boom and a manufacturing sector in its early months of expansion. Earnings growth is accelerating, breadth is widening, and the reporting season has so far absorbed the crisis without visible damage.

The Hormuz risk has not disappeared. A prolonged closure that embeds inflation and forces central banks higher could still slow the economy. But the earnings starting point is fundamentally different from either precedent. With the two pillars of the earnings recovery — semiconductor demand and the manufacturing cycle — still intact, we could be in the early innings of an S&P 500 earnings expansion that the oil spike has so far failed to interrupt.