Wall Street has cheered a surprisingly strong earnings season in recent weeks. Some market watchers warn that investors are underestimating the pain that's just over the horizon.

Solid earnings reports rolled in last week, helping the S&P 500 notch its longest winning streak in two decades. Growth has handily exceeded expectations so far this quarter. And 澳洲幸运5官方开奖结果体彩网:share-buyback announcements have surged to a record, according to a Deutsche Bank analysis, marking another sign of strength.

The outlook for corporate America has remained resilient despite 澳洲幸运5官方开奖结果体彩网:all the uncertainty created by President Donald Trump’s tariff policies. Analysts have cut their earnings expectations for the current quarter by 2.6%—more than average but not apocalyptic, according to Deutsche Bank analysts led by Chieꩲf Strategist Binky Chadha.

But there's a catch. "Many companies are either not incorporating the tariff impact into their guidance or suspending it given the uncertainty, and in our reading, analysts are, in turn, waiting for more clarity before adjusting numbers,” the analysts wrote in a note on Friday.

The absence of tariff-impact forecasts, they suggest, is why they see “significant potential downside to 澳洲幸运5官方开奖结果体彩网:consensus earnings estimates."

Deutsche Bank Sees 'Double-Digit' Earnings Plunge

Deutsche Bank estimates that if the proposed tariffs go into effect, S&P 500 earnings will contract by nearly 15% this year. They expect profits to decline 4% in the current quarter after growing 10% in the first quarter. “Further out, we see growth falling to double-digit negative rates in Q3 (-10%) and Q4 (-13%) as the 澳洲幸运5官方开奖结果体彩网:tariff impacts worsen,” the analysts wrote. 

Deutsche Bank’s analysts are more pessimistic than most on Wall Street. The consensus, they say, is that growth wil🌳l slow to about 4% in the currౠent quarter and reaccelerate to 7% to 8% in the second half of the year. In their view, that sort of growth would require “a swift and substantial relent on trade policy” that they’re not willing to bank on.

For clues about how tariffs could hit earnings estimates, look to Detroit. 𝓀Wall Street has slashed second-qua𒁃rter earnings estimates for automakers, arguably the industry with the most clarity on tariffs, by nearly 20%.

It's possible the tariffs unveiled in early April, most of which have been 澳洲幸运5官方开奖结果体彩网:paused until July, will end up lower than Wall Street's worst-case scenario. Trump has given certain industries 澳洲幸运5官方开奖结果体彩网:temporary exemptions and softened many of the tariffs he's implemented.

The White House said last month it is 澳洲幸运5官方开奖结果体彩网:negotiating with "more than 70 countries" and recently 澳洲幸运5官方开奖结果体彩网:expressed interest in de-escalating its trade war with China. (And here's Investopedia's latest on 澳洲幸运5官方开奖结果体彩网:the state of trade and the China relationship.)