NEW YORK, March 26 (Reuters) - Wall Street is confident that strong corporate earnings will prop up stock prices that have slumped since the Iran war began and set oil prices surging, rekindling worries about inflation.

The S&P 500 has dropped nearly 4% since the war began at the end of February, with oil prices jumping more than 30%.

Despite the turmoil, expected first-quarter earnings growth for the S&P 500 stands at 14%, according to LSEG data. That compares with 14.4% at the start of the year and the 12.4% estimate from October 1.

"So much is happening, yet nothing is happening. ... Companies inherently are becoming more resilient to geopolitical risks, particularly U.S. companies," Krishna Chintalapalli, portfolio manager at Parnassus Investments in San Francisco, said in an interview with Reuters.

Crude prices have surged as the war has choked off supply through the Strait of Hormuz, feeding inflation fears and dimming hopes for Federal Reserve rate cuts this year.

JP Morgan estimates that "each sustained 10% increase in oil prices could yield a 15 to 20 basis point hit to GDP" and that if oil prices stay around $110 per barrel for the rest of 2026, consensus EPS estimates could adjust lower by 2% to 5% or even more should oil prices move still higher.

On Wednesday, U.S. oil futures traded around $91 and global benchmark Brent crude was near $103.

Investors worry that surging prices for oil and related products such as fertilizer could rekindle inflation, dent consumer spending and discourage rate cuts by the Fed. Still, earnings expectations have remained largely intact.

"The companies we talk to, whether they're in the midst of the AI boom, or they are consumer-oriented companies like Walmart ( WMT ), or they're industrial companies like FedEx ( FDX ), they take a certain level of uncertainty will remain going forward as par for the course," Chintalapalli said.

LSEG data through Friday showed that of the 120 earnings forecasts for the first quarter from S&P 500 companies, 48% were positive with 44% negative relative to analyst estimates.

"Many companies noted that it was early days or too soon to tell what the impacts will be," said Lori Calvasina, head of U.S. Equity Strategy at RBC Capital Markets, in a recent note that analyzed company commentary. She added that "the outlook commentary we read left us thinking companies have had good reasons for staying calm," with the risk to earnings more likely to be in the second half of the year.

Airlines, among the most susceptible companies to rising crude prices and reduced discretionary spending power by consumers, have helped alleviate concerns over the upcoming earnings season. United Airlines and Delta Air Lines ( DAL ) recently announced that demand remained strong, affording them leeway to raise fares even as surging fuel prices forced them to cut flights.

"Companies in general play the earnings expectations game pretty well because they want to be able to announce a beat in most cases, " said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Southfield, Michigan. "So I wouldn't be surprised if we see some companies start to rein in expectations a little bit to try to dampen enthusiasm so that when they actually come through with the actual announcement."

Mike Wilson, chief U.S. equity strategist at Morgan Stanley, said in a note that as forward earnings growth remained strong, the current 12-month forward price-to-earnings ratio for the S&P 500 has dropped 15% from its October highs, which "supports our stance that the probability remains low for this oil spike to end the business cycle."

Venu Krishna, head of U.S. equity strategy at Barclays, on Tuesday raised the firm's 2026 S&P 500 price target to 7,650 from 7,400. This reflected a bet that strong corporate earnings led by the technology sector and resilient economic growth will outweigh rising macro risks, including war in the Middle East, AI-driven disruption and stress in private credit markets.

Ultimately, optimistic expectations for company earnings hinge on hopes the conflict in Iran will not be drawn out.

"Everything suggests that the market has convinced itself, or investors have convinced themselves, that this is kind of measured in weeks, maybe a couple months, and not anything kind of too much further from that perspective," said Michael Arone, chief investment strategist at State Street Investment Management in Boston, in an interview with Reuters.

"This quarter's earnings won't be so impacted, contributing to why you haven't seen a big negative reaction. But what do they have to say about the outlook, given where we are in the middle of April on the conflict, will be crucially important to where we go next."