Feeling stressed? You’re not alone. A new poll released this week shows that the combination of politics and the pandemic is generating high levels of anxiety among Americans. This stress is manifest lately on Wall Street, as worrisome headlines trigger sharp intraday volatility in the markets.

Don’t get whipsawed by the latest news about the coronavirus, or by the sheer idiocy emanating from Washington, DC. Keep your eye on the numbers. Projected corporate earnings growth is strong medicine for frayed investor nerves.

According to research firm FactSet, the projected earnings per share (EPS) growth rate for the S&P 500 in Q4 2021 is 20.9%. If that number turns out to be the actual growth rate for the quarter, it will mark the fourth straight quarter of earnings growth above 20%.

Keep in mind, this high projected EPS growth rate for Q4 stems from abnormally low levels of growth in pandemic-afflicted 2020. But there’s no denying that bottom lines are strong.

As of this writing on Thursday, the forward 12-month price-to-earnings (P/E) ratio for the S&P 500 is 21.3. This P/E ratio is above the five-year average of 18.4 and above the 10-year average of 16.6, but it’s not significantly misaligned with earnings projections.

Historically low interest rates help justify the market sporting a higher P/E ratio than its long-term average. The Federal Reserve is tapering its asset purchases but an actual hike in the fed funds rate is still far down the road.

Great expectations…

The good news on earnings doesn’t stop with Q4. For calendar year (CY) 2021, analysts project earnings growth of 45%. For CY 2022, the bottom-up EPS estimate for the S&P 500 is $222.32. “Bottom up” reflects an aggregation of the median EPS estimates for CY 2022 for all of the companies in the index.

If $222.32 is the final number for the year, it will mark the highest annual EPS number for the index since FactSet began tracking this metric in 1996. (FactSet is the data provider for Investing Daily.) See the following chart:

Admittedly, the past year has been characterized by analysts consistently setting earnings growth expectations too low, due to the pandemic. In 2022, that trend is likely to change as the virus fades from view and conditions return to a semblance of normality. Earnings growth is on track to continue in 2022, but that growth will start to descend.

Another concern that can’t be ignored is rising inflation, which begs the question: are rising input costs deeply cutting into corporate profit margins? It doesn’t appear so.

The estimated net profit margin for the S&P 500 for Q4 2021 is 11.8%, which exceeds the five-year average of 10.9% and the year-ago net profit margin of 11.0% (albeit, below the previous quarter’s net profit margin of 12.9%).

If 11.8% is the actual net profit margin for the quarter, it will mark the fifth-highest net profit margin reported by the index since FactSet began tracking this metric in 2008.

Watch This Video: The Omicron Conundrum

Fear of COVID’s Omicron variant are waning. On Wednesday, the main U.S. stock market indices rose as follows: the Dow Jones Industrial Average +34.32 (+0.10%); the S&P 500 +14.46 (+0.31%); the NASDAQ +100.07 (+0.64%); and the Russell 2000 +17.92 (+0.80%).

Fueling bullishness has been encouraging news about Omicron. Notably, Pfizer (NYSE: PFE) and BioNTech (NSDQ: BNTZ) announced Wednesday that their three-shot vaccine regimen can neutralize the variant in lab tests.

In pre-market future contracts Thursday, U.S. stocks were trading lower, as the major indices consolidated after three consecutive days of gains.

Nine of the 11 S&P 500 sectors are projected by analysts to report year-over year earnings growth for Q4, led by the energy, materials, and industrials sectors. These projections underscore the appeal right now of cyclical re-opening plays.

As cyclical sectors gain in appeal, I’m particularly keen on commodities. Accelerating economic growth and greater global infrastructure spending are boosting demand for crucial commodities, many of which are in short supply. For details about our favorite play on natural resources, click here now.

John Persinos is the editorial director of Investing Daily. To subscribe to John’s video channel, follow this link.