Why earnings season should matter to you

Trade wars and tariff talk are a drag on 401(k) plans, as all the grim headlines drown out good news and cap gains in the stock market.

But the bad vibes from politics and trade-related trauma could soon give way to upbeat news about the profitability of American companies, breathing fresh life into equities.

The second-quarter earnings-reporting season kicks off Friday when big banks, such as JPMorgan Chase and Wells Fargo, report results in what is likely to be the second straight quarter in which companies in the Standard & Poor’s 500 stock index grow profits at a

20 percent-plus pace, according to earnings-tracker Thomson Reuters.

Retirement investors familiar with media reports of companies’ earnings “beats” – code word for quarterly profit results that come in better than analysts’ expectations – should be rooting for Corporate America to perform well.

“Earnings season is ‘Report Card’ time,” says JP Gravitt, chief market strategist and CEO at Market Realist.

If most companies ace the profit test and their CEOs downplay the potential fallout from rising trade tensions,

401(k)s that have been languishing could get a boost as stocks move higher on the upbeat earnings news.

That’s why Wall Street will be listening closely to top corporate executives to see just how much of a threat a fullfledged trade war between the U.S. and its trading partners will have on business results.

“Is it just a potential threat or does it actually affect their results?” is what investors will want to know, says Gravitt.