Profits vs. Headlines: What's Really Driving Market Performance Right Now

While global conflicts and rising oil prices dominate the news, underlying corporate fundamentals tell a different story. Explore why steady earnings growth and bond market signals suggest that long-term investors should remain patient.

Last Edited by: LPL Research

Last Updated: April 03, 2026

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IN THIS ARTICLE:

Investing has felt uncomfortable lately. News about global conflict, rising oil prices, and interest rates has weighed on markets and sparked sharp swings in stock prices. These headlines often grab attention because they bring uncertainty. Still, they do not tell the full story about what is happening underneath the surface.

According to LPL Research, company fundamentals remain strong. When companies report first‑quarter results, earnings for the S&P 500 (Standard & Poor's 500) are expected to grow at a double‑digit pace for the sixth quarter in a row. That kind of growth reflects steady consumer demand, business spending, and ongoing investment in areas like technology and artificial intelligence.

Even though markets are reacting to current events, profits continue to play a major role in long‑term market performance. Over time, stock prices tend to move in the same direction as company earnings though past performance does not guarantee future results.

Why the Market Pulled Back

The recent decline in stocks has more to do with uncertainty than with weakening business conditions. The conflict in Iran has disrupted energy markets and pushed oil prices higher. That has raised concerns about inflation, economic growth, and interest rates, which often makes investors more cautious.

As March ended, the S&P 500 fell below its 200‑day moving average. This level is closely watched because it helps to show whether markets are in a longer‑term upward or downward trend. While this move does not signal sustained long-term trouble, it suggests markets may need more time before prices begin to recover.

Market pullbacks like this happen regularly, even during long periods of growth. Declines of 10-20% are not unusual and have occurred many times in the past.

What Bonds Are Telling Us

Bond markets can offer useful clues about how investors see the future. Right now, signals from bonds suggest that markets do not expect inflation to stay high for many years. This is important because it helps keep long‑term interest rates from rising too quickly.

In the latest LPL Market Signals podcast, LPL Research explained that bond markets appear to be looking past today’s higher oil prices rather than expecting long‑lasting economic damage. They also noted that this period does not resemble the high‑inflation environment of the 1970s, in their view.

More stable interest rates can help support both stock and bond prices during uncertain periods.

What Investors Can Take Away

Markets may continue to react to headlines in the near term. A sustained recovery may depend on easing tensions and more stability in energy markets. When that happens, earnings are likely to regain focus and support stock prices.

For investors, this environment highlights the value of patience and staying focused on long‑term goals. Short‑term market swings often feel unsettling, but they are a normal part of investing.

 

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MARKET PULLBACKS VS. INFLATION CONCERNS FAQS

When stocks fall despite strong profits, it’s usually driven by uncertainty rather than weakening fundamentals. Markets tend to look ahead, and investors often react quickly to concerns such as interest rates, inflation, policy changes, or geopolitical risks. Even when earnings are solid, rising uncertainty can lead investors to pull back temporarily, causing short-term market declines that don’t necessarily reflect the health of businesses.

A market pullback isn’t automatically a bad thing and is a normal part of investing. These periods can help reset expectations, reduce excessive optimism, and create opportunities for disciplined investors. Historically, pullbacks have often occurred without leading to recessions or long-lasting market downturns.

Concerns about inflation are easing compared with recent years, though they haven’t disappeared entirely. Bond market trends suggest inflation pressures may continue to moderate over time rather than remain persistently high. That said, inflation can be uneven, with certain areas like housing remaining sticky. For investors, this means inflation is still something to monitor, but not necessarily a reason to abandon long-term investment plans.

Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change. ​

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results. ​

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. ​

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy. ​

All investing involves risk, including possible loss of principal. ​

US Treasuries may be considered “safe haven” investments but do carry some degree of risk including interest rate, credit, and market risk. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. ​

The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The PE ratio (price-to-earnings ratio) is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. It is a financial ratio used for valuation: a higher PE ratio means that investors are paying more for each unit of net income, so the stock is more expensive compared to one with lower PE ratio. ​

Earnings per share (EPS) is the portion of a company’s profit allocated to each outstanding share of common stock. EPS serves as an indicator of a company’s profitability. Earnings per share is generally considered to be the single most important variable in determining a share’s price. It is also a major component used to calculate the price-to-earnings valuation ratio. ​

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings in commodities will result in significant volatility in an investor’s holdings. Commodities include increased risks, such as political, economic, and currency instability, and may not be suitable for all investors.​

The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. Indexes are unmanaged and cannot be invested in directly.

The MSCI US Broad Market Index captures broad U.S. equity coverage. The index includes 3,204 constituents across large, mid, small and micro capitalizations, about 99% of the U.S. equity universe. Indexes are unmanaged and cannot be invested in directly.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. Private credit carries certain risks — illiquidity, opacity, borrower concentration, and bespoke structures — that distinguish it from corporate bonds and bank loans and complicate its evaluation and oversight.

All index data from FactSet or Bloomberg.

This research material has been prepared by LPL Financial LLC.

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