What's going on?

Analysts are expecting US earnings to have grown by the most in a decade last quarter, as American companies leave 2020 in the rear-view and finally get back to the future.

What does this mean?

It�s that time of year when investors find out how companies have been performing, and they�re expecting big things: analysts have raised their estimates for US firms� earnings growth by 6% over the last three months. That record increase � more surprising considering analysts usually lower their expectations � could be because they slashed their earnings forecasts by too much at the height of the pandemic, or just because they�ve seen upward-trending economic growth expectations and adjusted accordingly.

Either way, US companies are forecast to have grown their earnings by 25% on average last quarter � way above the 4% average of the past five years (tweet this). Throw in the fact that most companies tend to underpromise and overdeliver anyway, and earnings growth will probably reach at least 28% � the highest in more than 10 years.

Why should I care?

Zooming in: All bets, please.

Investors reckon companies in the consumer discretionary sector � i.e. sellers of nice-to-haves, like carmakers and luxury goods companies � will post the biggest boost to earnings. Shoppers, after all, have needed something to spend their money on. Financial companies are projected to come in a close second, while energy companies and industrials � especially airlines � are expected to see their earnings drop.

For markets: Look for the underdogs.

Investors� main aim during earnings season is to back companies that�ll beat expectations, but between sky-high share prices and ever-climbing growth forecasts, that�s easier said than done. Still, consumer staples and utilities firms seem like a good place to start: not only are they the worst-performing US sectors this year, but analysts haven�t adjusted their expectations of them lately � making them the most likely to do something genuinely surprising.