What happens to stocks if we do not get earnings growth or god forbid earnings decline?

Right now SPX is trading around 26 times earnings(TTM) even after 10% decline from ATH.

EPS for 2024 was around 211 but estimates for 2025 is around 260, hence the reason for current SPX price.

Looking at how the market recovered last week, seems like they are still expecting earning growth to persist this year and next year too. They think this tariff drama will be wrapped up very soon or it will not have much effect on earnings (assuming valuation matters).

IIRC, if earnings decline, things can get very ugly as it occured in 2022-2023 (see below EPS chart for some context).

Only caveat is, if we get into mild recession and rates are cut to zero that may provide some support to stocks.

Another thing: I feel like stocks these days are under pricing risk premium, it's almost like a speculation where everyone thinks price will mostly go up so there is no risk in buying stocks.

Eps chart: [https://www.macrotrends.net/1324/s-p-500-earnings-history](https://www.macrotrends.net/1324/s-p-500-earnings-history)

PE chart: [https://www.macrotrends.net/2577/sp-500-pe-ratio-price-to-earnings-chart](https://www.macrotrends.net/2577/sp-500-pe-ratio-price-to-earnings-chart)