Corporate earnings in the fourth quarter have been stellar.

With 80.7% of the S&P 500’s market cap having reported earnings through the market close on Friday, February 9, 74% of companies are beating bottom-line estimates. Earnings are topping analyst expectations by an average of 4.8%. This is better than the 68% beat rate by an average of 4.7% seen over the last three years, according to data from Credit Suisse.

Credit Suisse also notes that earnings per share growth in the fourth quarter is expected to hit 15.3%, which would be the second-best quarter since the start of 2015.

But if current earnings beats relative to expectations hold through quarter-end, earnings per share could rise 15.9% against last year, which would be the strongest quarter for earnings growth since 2015.

Markets, however, have recently been enduring their most turbulent stretch in years, with the major averages falling more than 5% in the first full week of February. The nine-day drop of 10.04% from peak-to-trough seen through February 8 was the largest nine-day drop from an all-time high since at least 1980.

Disappointing market performance along with strong fundamentals — meaning good economic growth, good earnings, strong balance sheets, etc. — is not as surprising, however, as it might seem.

Strong earnings ≠ strong returns

In a note to clients earlier this month, Bank of America Merrill Lynch noted that strong earnings do not provide the kind of backing for strong stock market performance that many investors expect.

And earnings periods like the current one — in which the benefits of tax reform are helping corporate earnings grow by double-digits with expectations for the coming quarters continuing to rise — are exceptional and quickly discounted by investors.

“Over the past 90 years, the market has ended the year in negative territory 29 times,” Bank of America writes. “Of those 29 times, [earnings per share] was up almost 70% of the time and up double-digits close to 50% of the time. Over that same period, the correlation between annual S&P 500 performance and GAAP EPS is only 18%. If you lag EPS by one year, the correlation improves a bit to 42%, but even then, the corresponding r-squared implies that less than 20% of the S&P 500‘s annual performance is driven by earnings growth. We think that sentiment and growth expectations are a bigger driver of near-term returns, particularly late in bull markets.” (Emphasis added.)

Stock prices are a reflection of what investors are willing to pay for future earnings growth. The rally we saw in the stock market last year, then, was anticipating the future that exists right now.