(Bloomberg) -- One thing is clear as the first-quarter earnings season draws to a close: The uncertain outlook for the global economy is superseding better-than-feared results even as stocks rally on signs of easing trade tensions.

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Corporations across the US, Europe and China are pulling their forecasts for the year or providing grim outlooks, citing rising costs, weak consumer sentiment and a lack of business confidence as a result of President Donald Trump’s worldwide trade offensive.

“This earnings season wasn’t about the numbers, it was about the narrative,” said Scott Ladner, chief investment officer at Horizon Investments LLC. “Nobody cared what you did in the first quarter other than to determine the jumping off place for the new tariff economy.”

In the US, a measure that reflects the proportion of S&P 500 Index members that raised their earnings outlook compared to those that held or reduced, the so-called profit guidance momentum, fell to the lowest level since at least 2010, according to an analysis from Bloomberg Intelligence’s equity strategists Gina Martin Adams and Wendy Soong. That is in spite of S&P 500 companies delivering double the profit growth that was expected in the first quarter, according to BI.

Meanwhile in Europe, analysts’ expectation for 2025 earnings growth has slowed by the sharpest since the Covid pandemic, BI found, even as MSCI Europe constituents posted a 5% earnings increase, beating an expected 1.5% decline.

Bloomberg Intelligence strategist Kaidi Meng said shares of European firms that issued gloomy outlooks this earnings season tended to trail the broader Stoxx 600 on the day, suggesting the tariff impact hasn’t been fully priced in yet.

And in China, earnings projections for the benchmark CSI 300 Index have fallen 1.7% from a peak around the end of March, data compiled by Bloomberg show. Investors were in for a rude awakening as they were expecting outlooks to turn around in the first quarter, but Trump’s tariff blitz complicated the nascent recovery in corporate profits.

“We are in a more wait-and-see mode for China’s earnings picture, especially since domestic inflation is still quite low and suggestive of continued downward pressures on corporate pricing power,” said Homin Lee, senior macro strategist at Lombard Odier.

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To be sure, stocks have been on an epic rebound rally, helped largely by a temporary detente of US-China trade tensions. The S&P 500 has surged 20% from a low touched on April 8, the Hang Seng China Enterprises Index has climbed 14% over the same period, and the Stoxx 600 Index has risen 17% from its own low on April 9.

“Companies are doing what they should — planning for different scenarios under different tariff and economic regimes, and investors are rewarding both prudent managements and companies that have lower exposure to tariffs and have secular earnings growth power,” said Julian Emanuel, chief equity and quantitative strategist at Evercore ISI.

Tariff Bite

No industry has been safe from the looming threat of higher tariffs — from retailers, airlines and travel companies, to industrial manufacturers, medical device firms and chocolate makers.

The world’s largest retailer Walmart Inc. said it may soon need to raise prices, farm equipment company Deere & Co. expects levies to have a $500 million impact on costs in fiscal 2025, and Expedia Group Inc. said it expects travel demand in the US to be weak.

China’s Alibaba Group Holding Ltd. — a barometer of the country’s consumer economy — reported feeble revenue growth, and Germany’s Daimler Truck Holding AG lowered its sales and profit guidance for the year, flagging weaker orders in North America and higher parts costs from tariffs.

A Bloomberg analysis of S&P 500 and Stoxx 600 earnings calls shows tariff mentions spiked to a record high this season, and were much higher than Trump’s first trade war in 2018.

The lack of clarity on how the trade situation will shake out, pushed companies to take unusual measures. United Airlines Holdings Inc. issued two profit forecasts, one in case the environment remains stable, and another if there’s a recession. The other two major US carriers — Delta Air Lines Inc. and American Airlines Group Inc. — withdrew their guidances for the year. Automaker Mercedes-Benz Group AG also pulled its 2025 outlook, citing tariff uncertainty.

Meanwhile, executives at some companies, such as retailer JD Sports Fashion Plc, declined to answer questions on levies.

“Anything we say now will be misleading or could be misleading,” JD Sports Chief Executive Officer Regis Schultz said on a post-earnings conference call with analysts last month.

Resilient Tech

Still, the one bright spot this period was the relatively strong showing from technology companies, especially expensively valued artificial intelligence firms. The Magnificent Seven companies’ results allayed fears of a tariff-induced profit slump. Of the six in the group that have reported so far, four provided revenue forecasts that are either roughly in line or better than analysts’ expectations. Google parent Alphabet Inc. did not provide one, and Nvidia Corp. is scheduled to announce results on May 28.

For Aaron Clark, partner at GW&K Investment Management, the biggest takeaway of first-quarter earnings was the resilience of the AI-hyperscalers, which to him is a “risk-on signal.”

In Europe, results from the tech behemoths were mixed. Chip-equipment maker ASML Holding NV’s bookings disappointed even as the company said AI-related demand remains strong. On the other hand, German software company SAP SE signaled resilient demand for its cloud-based software despite growing trade uncertainties.

--With assistance from Zhu Lin.

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