High hopes for the earnings season have turned reality, but the markets haven't rallied. One of Wall Street's biggest bulls says there's nothing to be concerned about.
"I think the disconnect around all of this really lies around the fact that we've got great earnings — 25 percent earnings growth — and everybody's saying 'well, that looks like it. Peak earnings growth. So what's next?'" John Stoltzfus, Oppenheimer Asset Management chief investment strategist, said Monday on CNBC's "Trading Nation" Monday.
S&P 500 earnings have risen 25.6 percent in the first quarter, largely driven by corporate tax cuts passed in December. Of the roughly four-fifths of S&P 500 companies that have reported earnings, 79 percent have exceeded estimates, according to Thomson Reuters.
Strong earnings have not filtered through to across-the-board equity gains. Since the big banks kicked off earnings season on April 13, the S&P 500 has added just 0.5 percent.
Markets shouldn't get "spoiled" by this first-quarter performance, says Stoltzfus. While Wall Street may not see another quarter quite this strong, earnings growth will continue to be supportive of equities, he said.
"We think that improved earnings will prevail even if in the quarters that follow we see a reduction in terms of earnings growth," he said. "So long as we get this double-digit type of earnings growth, or at least high singles, we should be OK."
Analysts surveyed by FactSet anticipate 20 percent earnings growth for fiscal 2018 but forecast half that pace in 2019 and 2020.