KBRA says broader U.S. earnings growth supports risk assets
First-quarter 2026 earnings growth in the U.S. is continuing beyond mega-cap technology names, reinforcing support for elevated credit and equity valuations. Forecasts for the rest of the S&P 493, along with mid-cap and small-cap companies, remain solidly in double digits.
Highlights
- KBRA reports that while the Magnificent 7 still lead 2026 growth expectations, first-quarter earnings strength now broadens across large-, mid-, and small-cap U.S. firms.
- Expanded earnings support across more companies underpins valuations in both credit and equity markets, mitigating concerns about over-reliance on mega-cap tech stocks.
- KBRA links tighter credit spreads and investor risk appetite directly to widespread corporate profit growth, signaling broader market support beyond a few leading names.
KBRA outlook on first-quarter earnings breadth
As reported by Kroll Bond Rating Agency, the so-called Magnificent 7 stocks still lead earnings growth expectations in 2026, but the expansion is no longer limited to the largest technology companies. KBRA says that wider strength across large-cap, mid-cap, and small-cap firms is helping sustain appetite for risk assets and keeping credit spreads supported.In its latest 3 Things in Credit commentary, KBRA Chief Markets Strategist Van Hesser says healthy earnings growth across the broader market continues to underpin valuations. The view points to a market backdrop in which investors are relying not only on a handful of mega-cap names, but also on improving profit expectations across a wider set of companies.
Implications for credit and equity markets
The broader earnings base suggests support for historically elevated valuations in both credit and equities, especially if double-digit growth expectations hold through the quarter. A wider contribution from companies outside the largest technology group can also reduce concerns that market performance depends too heavily on a small number of stocks.For investors, the assessment reinforces the link between corporate profit trends and tighter credit spreads in the U.S. market. It also signals that risk support is coming from a broader earnings profile, rather than from a narrow leadership group alone.
In our earlier coverage of Verizon’s Q1 2026 earnings and VZ price action, we highlighted that the company beat EPS estimates, lifted its full-year adjusted EPS guidance, and posted its first first-quarter net gain in postpaid phone subscribers since 2013. We also noted that despite the fundamentally positive catalysts and shareholder returns, the stock’s technical picture looked mixed, with traders watching key resistance near $47.98 and a higher probability of near-term consolidation unless that level breaks.
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