Welcome to Hoxton Wealth, the new home of Hoxton Capital
Three Central Banks. Strong Earnings. And a Market That Refuses to Panic
Hoxton Blog • Three Central Banks. Strong Earnings. And a Market That Refuses to Panic
It has been a heavy week for headlines. Three major central banks have made rate decisions. Geopolitics has remained front and centre. Earnings season has continued to unfold. And yet, markets have not broken.
In fact, the S&P 500 is sitting above its pre-conflict high. That is the real story. Not fear. Not uncertainty. Resilience. The question that matters now is simple: what does this mean for you and your portfolio?
Central Banks Are Waiting. Not Changing Direction
This week, the US Federal Reserve, the Bank of England, and the European Central Bank all announced their latest interest rate decisions.
All three chose to hold rates steady. Not because they want to, but because current conditions leave them little choice.
| Central Bank | Current Rate | Decision | Their Message in Plain English |
|---|---|---|---|
| US Federal Reserve | 3.5%–3.75% | Hold, 8–4 split (most dissents since 1992) | Oil is keeping inflation elevated. Cuts are still expected, but timing remains uncertain. One cut likely before year-end. |
| Bank of England | 3.75% | Hold, 8–1 (one member voted to hike) | UK inflation is at 3.3% and rising. Growth cut to 0.7%. The bank is balancing inflation against slowing growth. |
| European Central Bank | 2% | Hold, cautious stance | Eurozone inflation is at 3%. Growth is slowing to 0.9%. A rate hike remains possible if energy prices stay elevated. |
The key point is straightforward. All three central banks would prefer to begin easing policy. The reason they cannot is oil.
The Iran conflict has pushed energy prices higher, which has fed directly into inflation and effectively paused the rate-cutting cycle. This is not structural. It is situational.
If energy prices stabilise, the constraint is removed. At that point, rate cuts come back into play, and those cuts are one of the most supportive forces markets can experience. The timing remains uncertain, but the direction is clear.
Earnings Are Quietly Doing the Heavy Lifting
While much of the attention remains on geopolitics, the more important story is happening underneath the surface. Companies are delivering. With around 40% of the S&P 500 having reported, nearly nine in 10 have beaten expectations.
Earnings are growing at double-digit rates for the sixth consecutive quarter, and revenues are at their strongest level in almost four years.
What stands out most is the breadth of this performance. All eleven sectors are reporting year-on-year revenue growth. This is not a narrow rally driven by a handful of technology firms. It is broad-based and consistent.
These are businesses operating through higher energy costs, supply chain adjustments, and geopolitical uncertainty, and still delivering growth. That matters. It supports current expectations of around 18% earnings growth for 2026.
That figure is not guaranteed and should be treated as an estimate, but the early evidence suggests it is achievable rather than optimistic.
Market Falls Are Normal. Recovery Is the Pattern
When markets fall, it is natural to assume something fundamental has changed. History suggests otherwise. Since 1950, the S&P 500 has experienced more than 70 drawdowns of 5% or more. Every single one recovered and went on to reach new highs.
S&P 500 Price with 5% and 20%+ Drawdowns Highlighted
The recent decline linked to the Iran conflict fits squarely within that pattern. It is not an exception. It is the pattern itself. Markets fall, often sharply and without warning. They also recover, and over time they move higher.
The experience is uncomfortable, but it is not unusual. Understanding that distinction is important because it shapes how you respond.
Recoveries Often Happen Faster Than Expected
There is another dynamic that investors often underestimate. Recoveries can be quick, and they often mirror the speed of the decline. The historical data shows that markets tend to fall rapidly into a low and then recover just as decisively.
Average S&P 500 Price Pate 12 Months Before and After Market Lows
Since the 8 April ceasefire low, the S&P 500 has risen from an indexed level of 100 to 143. That is a significant move in a short period. It also highlights the challenge of stepping out of the market during periods of volatility.
Investors who sold during the uncertainty of March and early April are now faced with a more difficult decision about when to return.
Missing the recovery can be more damaging than experiencing the decline itself, and that is a risk that needs to be recognised.
Time in the Market Still Decides the Outcome
At its core, investing is not about timing short-term movements. It is about time in the market. The longer you remain invested, the more consistent the outcomes have historically been.
Average S&P 500 Returns Over Various Periods
These figures include every major disruption over the past 76 years, including wars, recessions, inflation shocks, and financial crises.
The pattern remains consistent. Your financial objectives, whether that is retirement, supporting your family, or building long-term security, sit somewhere along that timeline.
They are not determined by short-term headlines. They are determined by your ability to stay invested over time.
Businesses Adapt. That Is What You Own
It is easy to focus on index levels and market movements, but behind every number is a business. This earnings season provides clear evidence of how those businesses operate under pressure.
Companies are managing higher input costs, adjusting supply chains, protecting margins, and continuing to invest for the future.
This is what quality businesses do. They have demonstrated it repeatedly across decades of disruption, from the oil shocks of the 1970s to the global financial crisis and the pandemic.
Each time, the prevailing view was that conditions might not normalise. Each time, they did. Businesses adapted, and many emerged stronger.
When current energy pressures ease, the same dynamic is likely to play out. Costs should fall, margins can recover, and demand across key sectors such as technology, healthcare, financial services, and consumer goods is expected to remain resilient. That is the foundation of long-term investing.
Our Message to You
This week has brought a significant amount of information. Central bank decisions, earnings updates, and ongoing geopolitical developments have all contributed to the noise. None of that changes the core principles that drive long-term investment outcomes.
If your portfolio is aligned with your objectives, your time horizon is long-term, and you are invested in quality businesses, the appropriate response remains consistent. Stay invested. Stay disciplined. Allow your strategy to work as intended.
The data continues to reinforce the same message. Drawdowns are part of the process. Recoveries follow. Businesses adapt. And over time, markets reward patience.
As Warren Buffett said, “The stock market is a device for transferring money from the impatient to the patient.”
That observation remains as relevant today as it has ever been. If you would like to review your portfolio or sense-check your long-term plan, you can reach us directly at client.services@hoxtonwealth.com or on WhatsApp at +44 7384 100200.
How Can We Help You?
If you would like to speak to one of our advisers, please get in touch today.
Contact Hoxton Wealth
We are available to discuss how Hoxton Wealth can help you achieve your financial goals. Together, we can help you build a brighter financial future.
