BlackRock has upgraded its outlook on U.S. stocks, moving its tactical rating to overweight from neutral, according to its most recent weekly market note. The asset manager, which oversees $14 trillion in client assets, said the decision reflects both a reassessment of geopolitical risk related to the Iran conflict and firmer expectations for corporate earnings.
Strategists at the firm said prospects for a lasting ceasefire have shifted their view on the conflict's economic consequences, leading them to conclude the effects are unlikely to be substantial after an initial period of heightened risk. BlackRock had earlier reduced its risk exposure in response to the outbreak of hostilities.
"We saw two signposts that would lead us to re-up risk after reducing it a few weeks ago. First, tangible evidence of actions that would reopen flows through the Strait of Hormuz. And second, visibility on the lingering macro impact being contained," the note said.
The firm highlighted that expectations for corporate earnings have risen for both the U.S. and emerging markets for 2026, even since the conflict began on Feb. 28. As earnings season begins, consensus estimates compiled by FactSet point to a 12.6% year-over-year increase in S&P 500 profits for the first quarter. FactSet added that if historical beat rates persist, that projected gain would lift to about 19%.
Technology profit growth is projected to be especially strong, with forecasts indicating a 45% increase this year. Despite that forecasted expansion, the information technology sector has generated only a marginal advance so far this year, a combination that BlackRock said has pushed its relative valuation versus the other 10 S&P sectors to the lowest level since mid-2020.
BlackRock's strategists wrote that they are increasing risk exposure in the U.S. and in emerging markets on the back of robust earnings expectations and limited accrued damage to global growth. They said they will be watching profit margins closely during the U.S. first-quarter earnings season and continue to favor thematic allocations such as defense.
At present, the U.S. and emerging markets are the only overweights in BlackRock's equity allocation.