JP Morgan predicts that US corporate profits will soar this quarter, leaving European counterparts far behind.

JP Morgan strategist predicts that the profit growth of American companies in this financial reporting season may significantly exceed that of their European counterparts. The bank's strategist Mislav Matejka pointed out that this is a reflection of the significantly lower threshold for companies in the S&P 500 index. Despite strong economic performance in the US, analysts have "significantly" lowered earnings expectations for the S&P 500 index in this quarter. Meanwhile, the situation in the European market is more complex. Matejka stated that earnings expectations for cyclical and defensive stocks in Europe are at a "stronger" level, but companies may find it more difficult to meet these targets. He wrote in his report, "This poses greater risks for Europe, especially in comparison to the speed of economic activity." This is undoubtedly another piece of bad news for the European stock market. This year, European stock performance relative to the US has hit a multi-year low, making it the worst-performing year. According to data compiled by Bloomberg, last year, the STOXX 600 index in Europe underperformed the S&P 500 index in local currency terms by more than 17 percentage points, making it the second worst performance since the benchmark index was created in 1998. The strong growth of the US economy and strong demand for tech giants are the main reasons for this discrepancy. In particular, US big banks performed exceptionally well. JPMorgan, Goldman Sachs, and Wells Fargo all saw their stock prices rise after announcing better-than-expected financial results. However, pharmaceutical company Eli Lilly saw a significant drop in stock price due to lower-than-expected revenue forecasts. According to Bloomberg industry research data, the earnings growth of S&P 500 index component companies is at a better-than-expected level of 7.7%, with nearly one-tenth of the market value of the companies having released reports so far. In contrast, the performance of the European market is mixed. Companies like BP, Taylor Wimpey, and Richemont SA have disappointed, while Richemont SA reported outstanding quarterly sales, reaching a historical high. Matejka pointed out that due to the imbalanced recovery of the Chinese economy, the future of the European stock market is "filled with challenges," leading to European stock market earnings falling behind the US throughout the whole of 2025. Meanwhile, Citigroup strategist Scott Chronert also expects that the fourth-quarter profits of S&P 500 index component companies will be "above average." Overall, despite uncertainties facing the US economy and corporate profits, both JP Morgan and Citigroup strategists believe that American companies will outperform their European counterparts in this financial reporting season. Matejka stated that the median forecast of American analysts shows a 3% increase in earnings in the fourth quarter compared to the same period last year, while the median forecast for Europe shows a 5% increase for cyclical stocks and a 9% increase for defensive stocks.