Reuters published Wednesday under a headline that read like a dare: "Wall Street bets US corporate earnings will withstand surging oil prices." The article reported that analysts project S&P 500 earnings to grow 14 percent in the first quarter of 2026, that the consensus remains intact despite oil surging 30 percent since the war began, and that Wall Street is "confident that strong corporate earnings will prop up stock prices that have slumped since the Iran war began." [1]

The confidence has a calendar problem. Q1 2026 runs from January 1 through March 31. The war began on March 1. Two-thirds of the quarter elapsed before the Hormuz blockade, the oil spike, and the energy inflation that followed. Q1 earnings will reflect two months of pre-war normalcy and one month of disruption. They will look fine. They are supposed to look fine. The question Wall Street is not asking -- or is asking quietly, in the kind of notes that circulate internally before they appear in public -- is what Q2 looks like when all three months carry the war premium.

Reuters also published a companion piece the same day: "War, oil shock, uncertainty? Time to raise US equity outlook." The juxtaposition was instructive. Wall Street has outperformed its global peers in the four weeks since the war broke out, partly because the United States is a net energy producer that benefits from high oil prices at the national level even as individual consumers pay more at the pump. The S&P 500 energy sector is up 11 percent since March 1. The rest of the index is flat to negative. The market is not ignoring the war. It is pricing in the winners and hoping the losers do not show up until Q2 earnings season, which begins in July. [2]

Big Oil's numbers tell the most direct story. Reuters reported that energy majors are set to "reap billions from Iran war windfall." At an average price increase of $33 per barrel, additional revenues in March alone add up to approximately $4 billion for the five largest Western oil companies. Those revenues will appear in Q1 earnings as pure upside. They will not be labeled "war premium." They will be labeled "strong commodity performance." [3]

On X, financial accounts divided predictably. Bullish voices shared the Reuters headline as evidence that the American economy can absorb the shock. Skeptical voices -- including accounts that track earnings revisions, forward guidance, and sector rotation -- noted the calendar issue and called the confidence "pre-war denial." One thread circulated widely: "Q1 earnings will be great. Q1 earnings are always great when the shock happens in the last month. The question is Q2, and nobody wants to model Q2 with $100 oil and a frozen housing market."

The broader pattern is familiar from every oil shock since 1973. The first quarter after the shock looks manageable. Earnings beats are reported. Analysts maintain their targets. Then the second-order effects arrive: consumer spending declines, input costs cascade through supply chains, margins compress. The question is not whether Q1 earnings withstand the war. They will. The question is whether the Wall Street confidence that Q1 buys is sufficient to carry portfolios through the quarters when the war's costs actually appear on the income statement.

-- THEO KAPLAN, San Francisco