In the fourth quarter of 2000, seven months after the dot-com bubble burst, Wall Street stopped listening to earnings.

Companies that beat forecasts got almost no reward. Companies that missed got almost no punishment.

It happened again a year later, in the fourth quarter of 2001. Then it never happened again.

Until now.

Bank of America equity strategist Savita Subramanian said in a note Monday that the gap between how stocks trade after beats and after misses is the narrowest since 2001.

Companies that topped both profit and sales forecasts in the third quarter beat the S&P 500 by 0.9 percentage point the next day, against a historical average of 1.4 points. Those that missed on both traded in line with the market, against a usual lag of 2.5 points.

The spread has been narrower only twice, in the fourth quarters of 2000 and 2001, both after the tech bubble peaked in March 2000.

Earnings Are Not the Problem

With 88% of S&P 500 companies reported, 84% have beaten profit estimates, above the five-year average of 78%, FactSet said Friday.

Blended third-quarter earnings growth stands at 31.4%, the third straight quarter above 25%.

However, the beats have shrunk. Companies are topping estimates by 2.7% in aggregate, against a five-year average of 7.5%, the smallest surprise since the fourth quarter of 2022 if it holds.

Stocks that missed fell just 1.1% around their reports, compared with a five-year average decline of 3.1%, FactSet said.

Macro Is Drowning Out Micro

“The beat/miss performance spread is muted as macro concerns dominate micro,” Subramanian said.

The biggest concern arrived with the midterm elections. The Democratic sweep turned a four-week slide in artificial-intelligence stocks into a rout, and on Nov. 5 the S&P 500 fell 4.4%, its worst day since April 2025.

According to Bank of America, a Democratic sweep raises the risk of delays to AI spending, which has been the strongest driver of S&P 500 earnings growth over the past three years.

The bank’s chip analysts estimate that a 20% cut to 2027 AI capital spending could wipe out 35% to 40% or more of AI chipmakers’ earnings, trimming 2027 S&P 500 earnings by 7% to 8% before knock-on effects.

Even tech companies that beat estimates fell 1.8% relative to the market the next day, according to Bank of America.

The Market Has Rarely Paid Less for This Much Growth

The S&P 500 trades at 17.7 times expected earnings for the next 12 months, its lowest multiple since Nov. 1, 2023, according to FactSet. It started the year at 22.

Since Dec. 31, the index has risen 7.4% while forward earnings estimates have jumped 33.6%. Prices did not fall. Earnings simply ran ahead of them.

Where the 2001 Parallel Breaks Down

In 2000 and 2001, the market ignored beats because profits were about to collapse. Recession arrived in March 2001, and the Nasdaq Composite lost nearly 80% from its peak by October 2002.

This time, the outlook from companies remains firm.

Only 43% of S&P 500 companies issuing fourth-quarter guidance have issued negative outlooks, below the five-year average of 60%, according to FactSet. Bank of America counts 2.7 above-consensus guides for every below-consensus one since Oct. 1, against an average of 0.8.

Deutsche Bank strategist Jim Reid said Monday that S&P 500 earnings growth of 34%, as measured by his colleagues Binky Chadha and Parag Thatte, ranks among the strongest outside recession rebounds.

“There is little doubt that we’re in a period of uniquely strong earnings,” Reid said.

The Next Test Is Nvidia

The SPDR S&P 500 ETF Trust (NYSE:SPY) is up 9.8% this year as of Monday’s close, while the Invesco S&P 500 Equal Weight ETF (NYSE:RSP), which gives every company the same weight, is up 15%.

The pressure sits in the largest AI names, not the broad market. Nvidia Corp. (NASDAQ:NVDA), the biggest bet on AI spending, reports Nov. 17.

In 2000, investors stopped believing the numbers because the numbers were about to turn.

Today, the numbers have not turned. The market is simply refusing to pay for them until Washington, not the earnings calendar, settles the outlook for AI spending.