Earnings season delivers: While markets obsessed over tariffs, corporate America quietly adapted
By Jeff Powell
Elevage Partners CEO
Here’s what actually happened last week while everyone was watching social media for the next trade policy announcement: American companies crushed their earnings expectations. General Motors surged 14.9% after beating estimates and raising guidance. Ford jumped 12% on strong results. By Friday, about 85% of S&P 500 companies that had reported beat Wall Street expectations (Source: Edward Jones, Oct. 17, 2025).
The market noticed. All three major indices hit record highs on Friday. The Dow closed above 47,000 for the first time, gaining 1.01% to 47,207 (Source: CNN Business, Oct. 24, 2025). For the week, the Dow added 1.6%, the S&P 500 climbed 1.7%, and the Nasdaq jumped 2.1% (Source: Nasdaq, Oct. 20, 2025).
This wasn’t speculation or momentum chasing. This was markets responding to something increasingly rare: actual fundamental news.
CEO Jeff Powell
The Narrative vs. the Numbers
For months, we’ve heard the same story: Tariffs will destroy corporate profits. Supply chains are broken. Margins will collapse. Then earnings season started, and companies proved the doubters wrong. S&P 500 net margins stood at 12.3% in the second quarter — above the five-year average (Source: J.P. Morgan, Oct. 2025). Full-year 2025 earnings are forecast to grow 10.5%, with 2026 potentially accelerating to 13% (Source: Edward Jones, Oct. 17, 2025).
GM offered the most striking example. The automaker didn’t just beat expectations — it raised guidance and said it expects to offset about 35% of its tariff impact through pricing and productivity improvements (Source: CNBC, Oct. 20, 2025). The stock had its best day since March 2020. Ford followed with results that sent shares up 12% — their best day since 2020 (Source: CNN Business, Oct. 24, 2025). These companies operate in one of the most tariff-exposed industries. If anyone should be getting crushed, it’s automakers. Yet they’re adapting and thriving.
How Companies Are Managing the Challenge
The answer is less dramatic than headlines suggest: basic business adaptation. Companies are finding alternative suppliers. They’re negotiating better terms. They’re passing some costs to consumers who continue spending. They’re improving productivity through automation and artificial intelligence. They’re optimizing operations they should have optimized years ago. In short, they’re doing what well-managed businesses do when faced with challenges.
Coca-Cola jumped 4.1% after beating estimates (Source: Yahoo Finance, Oct. 21, 2025). 3M surged 7.7% on strong results (Source: Yahoo Finance, Oct. 21, 2025). Even regional banks, a source of recent concern, posted better-than-feared results (Source: Nasdaq, Oct. 20, 2025).
Record Highs Across the Board
The Dow pushed through 47,000 for the first time in history on Friday (Source: CNN Business, Oct. 24, 2025). The S&P 500 and Nasdaq also hit fresh records. The VIX, known as the fear index, dropped 5% as investor anxiety eased (Source: CNN Business, Oct. 24, 2025).
What drove the rally? Strong earnings met with supportive economic data. September’s Consumer Price Index, delayed by the government shutdown, finally arrived Friday showing inflation heating up less than expected (Source: CNN Business, Oct. 24, 2025). Markets now price in a 99% probability of a Fed rate cut next week (Source: Yahoo Finance, Oct. 24, 2025).
Bob Doll, CEO at Crossmark Global Investments, captured the moment: “When the Fed is lowering rates and earnings are good, markets don’t go down very much. That’s where we find ourselves” (Source: CNN Business, Oct. 24, 2025). This is the classic bull market setup: Corporate earnings growing while the Fed eases policy. It’s not guaranteed to continue, but it’s historically been a favorable environment for equities.
What We’re Watching
The momentum from last week sets up several key developments that will shape the final quarter of 2025.
Earnings continue to roll in: This week brings results from technology giants Microsoft and Apple — two companies that have been market leaders throughout 2025. While traditional industrial and consumer companies demonstrated resilience last week, confirmation that big tech earnings remain strong would provide further fuel for the rally. We’ll be listening closely to management commentary about AI investment returns, cloud growth and consumer spending patterns.
The Federal Reserve meeting: A quarter-point rate cut on Oct. 28-29 is nearly certain — markets are pricing in 99% odds. But the cut itself matters less than the guidance. How does the Fed view the balance between moderating inflation and potential growth concerns? Will they signal more cuts ahead, or suggest a pause to assess conditions? Their language will set the tone for the remainder of the year and shape expectations for 2026.
The Trump-Xi summit: Scheduled for Oct. 31 at the APEC meeting in South Korea, this represents the first formal negotiation between the leaders since trade tensions escalated. Trump has already softened his rhetoric, calling 100% tariffs “not sustainable” (Source: Nasdaq, Oct. 20, 2025). Even modest progress toward a framework could remove a significant source of market uncertainty. Companies have shown they can adapt to tariff uncertainty, but clarity would be welcomed.
Corporate guidance matters more than ever. With the government shutdown creating data gaps, corporate America has become our most reliable source of economic information. What are CEOs seeing in their businesses? Are they confident enough to increase investment? Is consumer demand holding up? Are supply chain pressures easing or intensifying? The answers to these questions, embedded in earnings calls, will tell us more about the economy’s trajectory than any government report.
The Lesson for Investors
There’s a tendency in financial media to focus on drama. Social media posts make headlines. Trade threats generate clicks. Market volatility creates content. Meanwhile, quietly, American businesses serve customers, manage costs and generate profits. They adjust to regulations, navigate supply chains, invest in productivity and compete in global markets. This earnings season reminded us: While headlines scream about macro uncertainty, companies execute at the micro level. And, over time, that execution drives stock prices.
We saw it in GM adapting better than expected. In Ford maintaining profitability. In Coca-Cola growing globally. In 3M improving margins. This is what investing is actually about—not predicting tweets or guessing trade policy, but identifying well-managed companies that create value regardless of the environment.
If you’re a long-term investor, last week offered reassurance. The companies you own aren’t passive victims of policy uncertainty. They’re active participants finding ways to grow and profit even in challenging conditions. This doesn’t mean the path ahead is smooth. Trade tensions could re-escalate. The Fed could err. Unexpected shocks happen. But what last week demonstrated is that the foundation of the equity market — corporate earnings — remains solid. Companies are adapting, margins are holding and growth is continuing.
At Elevage Partners, we focus on fundamentals rather than noise. Last week validated that approach. While others whipsawed on trade headlines, companies quietly delivered. While social media drove sentiment, earnings drove reality. Warren Buffett said it best: “The stock market is designed to transfer money from the impatient to the patient.” Steady, fundamental-driven investing wins over reactive speculation. It’s not exciting. It doesn’t make dramatic headlines. But we believe it works.
As we head into the final quarter of 2025, we’re encouraged by what corporate earnings are telling us. American businesses are resilient, adaptable, and profitable. They’re navigating challenges successfully and delivering for shareholders. That’s the story that should actually matter in the longer term.
The information contained herein represents the views of Elevage Partners at a specific point in time and is based on information believed to be reliable. No representation or warranty is made concerning the accuracy of any data compiled herein In addition, there can be no guarantee that any projection, forecast, or opinion in these materials will be realized. Any statement non-factual in nature constitutes only current opinion which is subject to change. These materials are provided for informational purposes only and do not constitute investment advice. Any reference to a security listed herein does not constitute a recommendation to buy, sell, or hold such security. Past performance is no guarantee of future results. The historical returns of any securities and/or sectors mentioned in this commentary are not necessarily indicative of their future performance.