Forget the election — earnings could be a big tailwind for stocks

Earnings could be a bright spot for stocks

The presidential election has rocked the market over recent weeks, with optimism about a Clinton victory leading to a pre-election-day rally, before a surprise Trump win led to an overnight cratering in the futures market, which yielded dramatically to a post-election bounce for stocks.

Of course, in the long run, the value of stocks ultimately comes down to expectations and future earnings. And at least when it comes to the quarter that just ended, earnings have looked surprisingly good.

Eight of the 's 11 sectors managed to show year-over-year earnings per share growth for the third quarter. On the whole, S&P 500 earnings increased by 3.6 percent, according to data from S&P Global.

This is a dramatic turnabout from the "earnings recession" that stocks have been mired in.

"This is the first quarter where we've seen positive growth after four quarters of earnings contraction, so we've finally gotten out of that trough," Erin Gibbs, equity chief investment officer at S&P Global, said Tuesday on CNBC's "Trading Nation."

And the quarter began with analysts forecasting a 1 percent decline in earnings, meaning that the actual result showed "almost a 5 percent improvement; that's a nice, big fat improvement for earnings surprise, even by normal standards," Gibbs said.

"And we're still looking for even more positive numbers in the fourth quarter in 2017," she added. "So fundamentally, we look to be in good shape."

Bulls may find something to like in the charts as well.

"From our perspective, despite who moves into 1600 Pennsylvania Avenue this January, the market remains on solid footing, supported by both constructive fundamental and technical trends," Craig Johnson, senior technical research analyst at Piper Jaffray, wrote in a note to clients Wednesday morning.

He added that investor anxiety will fade now that the election is over, an observation that is borne out by Wednesday's drop in the CBOE Volatility Index.

When it comes to earnings expectations for the year ahead, Johnson and Piper Jaffray had been forecasting "low double-digit" earnings per share growth in 2017, and his expectations have not shifted upon Donald Trump's victory, he told CNBC on Wednesday.