banks unofficially kicked off the first quarter 2018 earnings season on Friday with results from JPMorgan, Wells Fargo and Citigroup. All beat due to a combination of volatile Q1 markets, tax reform, interest rate normalization and robust economic growth, but investors weren't sure how they felt about those numbers, with those stocks initially rising on the news then falling..

The S&P 500 index is expected to see EPS grow 17.5% year-over-year (YoY) with revenues increasing 8%, the best numbers since Q2 2011. The sectors driving growth are energy and materials (still due to easy YoY comparisons), followed by financials and information technology, the two largest sectors by market cap. The sector with the lowest expected profit growth rate is consumer discretionary at 6%.

Current index levels and robust earnings expectations for 2018 suggest that stocks are fairly valued, maybe even cheap when adjusting for low interest rates. S&P 500 forward 12-mo P/E hovering around 17x, the 20-year historical average. If we stay at this level is heavily dependent on current earnings expectations being achieved.