A year after the coronavirus pandemic hit the economy, US companies have reported quarterly results, and Wall Street has ushered in a crucial earnings season.

The major banks will officially announce their results next week. First-quarter profits of S & P 500 companies are expected to rise 25 per cent from a year earlier, according to Refinitiv's IBES data.

It would be the biggest quarterly increase since 2018, when profits soared as former President Donald Trump's tax cuts boosted profits.

Brad McMillan, chief investment officer of the Federal Finance Corporation, said: "We have seen a rise in earnings expectations, but when you measure market prices by these forward price-to-earnings multiples, it has been fairly stable at about 22 times. "

"if we are to see major changes in the future, it will come from benefits. "

As of Friday, the S & P 500 was trading at 22.3 times forward earnings, compared with a long-term average of about 15 times earnings, according to Refinitiv.

Companies that had previously reported strong results. Strategists say this bodes well for the rest of the quarter and could be a sign of better-than-expected results.

Nick Raich, chief executive of independent research firm The earnings Scout, said that as of Thursday, 20 companies in the S & P 500 that reported results beat analysts' expectations by an average of 11%. 'This is about 1.5 times the average of these companies over the past three years and about three times the long-term average,'he said.

Another positive sign is that overall expectations have been rising before entering the profit period. After the company gives conservative expectations, estimates usually fall before the reporting period.

In early March, analysts expected first-quarter profits of S & P 500 companies to rise 22%, according to Refinitiv.

However, some fear that investors will be disappointed after a sharp rise in corporate earnings expectations, which could weigh on share prices. The move comes after economically sensitive sectors such as energy and financial stocks have been rising for months.

Investors believe these stocks are most likely to benefit from the U. S. economic recovery.

For all of 2021, earnings for companies in the s & p 500 are expected to grow by 26.5%, compared with 12.6% last year.

One risk to future earnings is that U. S. President Joe Biden will raise corporate tax from the current 21%. According to UBS, the 28% tax rate will reduce earnings per share of S & P 500 companies by 7.4%.