U.S. stocks are struggling to reflect strong corporate earnings as investors focus on artificial intelligence concerns and a rare convergence of key economic data.
BNN Bloomberg spoke with Art Hogan, chief market strategist at B. Riley Wealth, about why earnings trends remain supportive, how upcoming jobs and inflation reports could shape expectations and why last week’s software selloff may have gone too far.
Key Takeaways
- Nearly 80 per cent of S&P 500 companies have beaten earnings estimates so far, well above historical averages.
- Earnings guidance for 2026 has moved higher, lifting expectations for full-year profit growth.
- Investor focus on AI spending and software disruption has muted market reactions to solid results.
- This week’s jobs and inflation reports could help clarify the Fed’s policy path and improve sentiment.
- Recent selling in software stocks appears overdone, setting the stage for a potential rebound in technology.
Read the full transcript below:
ROGER: As we continue through earnings season, our next guest says results are much stronger than what has been reflected in stocks so far. Let’s get more on that and a preview of upcoming jobs data with Art Hogan, chief market strategist at B. Riley Wealth. Art, thanks, as always, for joining us.
ART: All right, Roger. Thanks so much for having me.
ROGER: Earnings look good, markets less so. Do you think investors should be reacting more positively?
ART: Yeah, it’s interesting. We kicked off earnings season about three weeks ago with the banks, and unfortunately all the banks went into earnings season at or near all-time highs. So the reaction was a classic sell-the-news response. That dynamic has played out through most of earnings season.
We’ve had almost 80 per cent of companies beat earnings estimates, and about 72 per cent beat on revenue. Both of those are higher than the five-year average. Earnings growth is significantly better than what we expected at the start of the quarter and, most importantly, guidance for calendar year 2026 has moved higher.
S&P 500 earnings estimates for this year have risen from roughly US$307 to about US$312 per share. Those are all positives, but when the market gets wrapped up in concerns around AI spending and what some are calling “software-mageddon,” it’s hard to have a positive reaction to earnings.
The fundamental backdrop is strong. Fourth-quarter earnings growth marked the sixth straight quarter of double-digit earnings growth for the S&P 500, and estimates for this year continue to rise. Once we see through some of the noise around AI capex and software disruption, I think investors will recognize that we’re actually trading at a better multiple than we were at the end of last year. We don’t need much multiple expansion to have a very good year.
ROGER: Do you think it takes one big catalyst to change sentiment, or several smaller ones?
ART: I think it’s going to take a few things. First and foremost, we get really important economic data this week, and that could be a trigger.
On Wednesday, we get the delayed non-farm payrolls report. Expectations are for somewhere between 65,000 and 75,000 jobs, which would be well above the three-month average of about 30,000 jobs per month. If that comes in reasonably strong and unemployment stays steady or ticks lower, that would be a positive.
Then on Friday we get CPI. If inflation remains cool and unchanged month over month, investors will likely feel more comfortable with the Federal Reserve staying on pause until around June.
Retail sales were a bit disappointing today, flat in December, but when you look at the two-month average, November was much stronger than expected. On that basis, retail sales look better than the December headline suggests.
ROGER: We rarely get jobs and CPI in the same week. Could mixed results cancel each other out?
ART: That’s a great question. We almost never get CPI and non-farm payrolls in the same week, but the brief government shutdown created that situation.
Could you get offsetting reactions? Possibly. I think expectations for payrolls may be a little high, and anything above the recent three-month average will likely be seen as positive, especially if unemployment doesn’t move and labour force participation stays firm.
On CPI, there hasn’t been much correlation with PPI over the past year, so last week’s PPI doesn’t necessarily tell us much. Most of the CPI components are well known ahead of time. An in-line CPI combined with a slightly weaker jobs report would probably be fine for stocks.
Where markets could get concerned is if we see an upside surprise in inflation alongside a strong jobs number, which could push rate cuts further into the middle of the year.
ROGER: What about the small business optimism index?
ART: I think the NFIB survey is about as good as surveys get. While some components were a bit weaker than expected and slightly lower than the prior month, intentions to hire actually ticked up. That’s one of the most important parts of that survey.
More than 60 per cent of jobs in the U.S. are created by small businesses, so rising hiring intentions are a positive, even in what’s generally viewed as a weaker labour market. There was a silver lining in what was otherwise a fairly cloudy report.
ROGER: Turning back to earnings, Coca-Cola reported today and disappointed somewhat. What are you watching in the days ahead?
ART: Coca-Cola is a good example of how positioning matters. Consumer staples have benefited from this year’s rotation, and Coke and Pepsi sit right in that space. Those stocks had moved to fairly stretched valuations.
When a stock has already had a significant run, it can report solid earnings and still sell off. We saw the same thing early in earnings season when JPMorgan reported a blowout quarter and the stock fell because it was already at an all-time high and up about 30 per cent year over year.
ROGER: Do you see rotation back into technology?
ART: I think we’re already starting to see that. If you look at the IGV software index, it became extremely oversold during last week’s selloff tied to AI disruption fears.
The relative strength index typically trades between 30 and 70. IGV fell to around 12, the lowest level in its history. It’s bounced meaningfully from those lows. That suggests the selling was overdone.
I think we’ll see a bounce in technology. Nvidia could be a catalyst when it reports in a few weeks. Hyperscalers continue to talk about heavy spending, and Nvidia is a clear beneficiary. The stock hasn’t done much in the past six months, so it could help drive a broader improvement in sentiment.
ROGER: Art, great to have you. Thanks for your time.
ART: Thanks so much for having me.
ROGER: Art Hogan, chief market strategist at B. Riley Wealth.
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This BNN Bloomberg summary and transcript of the Feb. 10, 2026 interview with Art Hogan are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
