Fear sells. It drives Internet traffic and television ratings. From my early days as a newspaperman, we had a saying: If it bleeds, it leads.

In Monday’s Mind Over Markets column, I advised you to remain skeptical of the media’s fearmongering over Ukraine. Largely due to hysterical news coverage of Russia’s possible invasion of Ukraine, U.S. stocks slumped Thursday, Friday and Monday.

But sure enough, Tuesday morning after the opening bell, the major U.S. stock market indices were trading sharply higher, after Russia pulled back its troops near Ukraine and indicated a diplomatic compromise is possible. Overseas indices were in the green as well.

History shows that geopolitical saber-rattling only exerts a fleeting impact on equity markets. Remember how spooked Wall Street used to get by North Korean missile tests? Now those tests are greeted with a yawn (and in some cases, derision).

Don’t get whipsawed by headlines. The “breaking news” chyron is not your friend.

The contrary perspective…

We’ve witnessed a lot of volatility lately, but when measured over the past six months, the net performance of the S&P 500 has been sideways. In February, the best performing sectors have been energy and financials. While stocks will no doubt seesaw from day to day and week to week, from a contrary perspective outbreaks of unwarranted pessimism provide buying opportunities for long-term investors.

The technology sector is down about 10% year to date, which in my view puts a lot of solid tech stocks on sale.

To be sure, inflation poses a real threat. The U.S. consumer price index jumped by 7.5% in January, the largest year-over-year increase since 1982 (see the following chart).

However, economic growth continues apace, unemployment is falling, and the housing market is strong. And, importantly, key early warning signposts are still not signaling an imminent economic contraction.

This week, keep an eye on these economic reports: retail sales and Federal Open Market Committee minutes (Wednesday); initial jobless claims and housing starts (Thursday); and existing home sales and leading economic indicators (Friday).

Meanwhile, corporate earnings growth is robust. For stocks, that’s where the rubber hits the road.

For fourth quarter 2021, with 72% of S&P 500 companies reporting actual results (as of this writing), 77% of S&P 500 companies have reported a positive earnings per share (EPS) surprise and 77% of companies have reported a positive revenue surprise. In aggregate, companies are reporting earnings that are 8.6% above expectations.

For Q4 2021, the blended earnings growth rate for the S&P 500 is 30.3%. If 30.3% turns out to be the actual growth rate for the quarter, it will represent the fourth consecutive quarter of EPS growth above 30%. The last time the S&P 500 posted four consecutive quarters of EPS growth above 30% was Q4 2009 through Q3 2010.

Earnings are consistently beating expectations. On December 31, the estimated EPS growth rate for Q4 2021 was 21.3%.

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That said, corporate managers continue to express concern about inflation. Nearly 75% of S&P 500 companies are citing “inflation” on Q4 earnings calls (see chart).

Inflation tends to be an emotional topic but stay level-headed. Those who blame federal spending or energy policy for high inflation are grinding partisan axes and they’re wrong. The main culprit is supply and demand imbalances caused by the global pandemic. We’re already getting indications that supply chain woes are easing.

News bulletins get the adrenaline pumping. But remember, investing should be methodical and coldly rational. Seek excitement elsewhere.

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John Persinos is the editorial director of Investing Daily.

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