Happy Friday eve, investors.

Stocks are up, earnings look upbeat, and the case for the Fed to cut interest rates still isn’t strong.

All this is to say Wall Street doesn’t seem to be sweating a recession anymore.

What recession?

It seems like just yesterday a Wall Street analyst couldn’t open their mouth without saying “looming recession.”

As earnings season winds down, that chatter has all but evaporated. 

A banner stretch for corporate America has extinguished concerns of an economic downturn — even though inflation isn’t cooling as anticipated, rate cuts are up in the air, and the labor market remains tight. 

According to FactSet, S&P 500 companies have largely crushed it to start the year, with more than three-quarters of names beating expectations. 

Earnings per share (EPS) for S&P 500 companies are up 5.2% compared to a year ago, squarely above the consensus forecast of 3.4%.

If that holds, it would mark the strongest growth in roughly two years. 

To that point, the number of times the word “recession” came up on earnings calls and investor events has dropped from 302 a year ago to 100 this quarter, FactSet data shows. 

That also marks a two-year low.

Usually, analysts will cut earnings estimates during the first month of a quarter by paring what’s called a bottom-up EPS estimate — the aggregate median EPS estimate for all the companies in the index. 

Over the last decade, the average decline in this bottom-up EPS estimate has been 1.8%, per FactSet. 

And with hot economic data, geopolitical concerns, and an uncertain political cycle, it would make sense to predict a steeper dip than usual this year. 

Yet over the month of April, Wall Street forecasters actually raised this figure by 0.7%. 

Analysts haven’t raised the bottom-up EPS estimate during the first month of a quarter since the end of 2021, FactSet’s John Butters said in a note.  

Even more strange is that this upward revision happened while the S&P 500 index actually fell by more than 4%. 

So, here’s a weird April recap: 

The macro backdrop makes things even more confusing. 

The US is dealing with rising individual and corporate delinquencies, weak consumer sentiment, overseas tensions, and a central bank that can’t stamp out inflation.

But consumers keep spending, layoffs haven’t spiked, and economic growth is still chugging along. 

Just yesterday, Goldman Sachs, for one, raised its second-quarter GDP estimate from 3.3% to 3.4%. 

What does all this add up to? 

For Wall Street, cushier profits. 

*At a glance:

Elsewhere:

Rapid-fire:

Last thing:

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