Were the earnings season to maintain this trend, it would be the highest number on record. The largest surprises have come from Wall Street’s big banks, which are the first blue chips to report—

Morgan Stanley

shrugged off a $911 million loss from the Archegos implosion—as well as consumer-goods firms like

Lennar.

Optimism is reinforced by the latest economic data. In the U.S., retail sales for March were the strongest in 10 months. Even in Europe, where there has been less fiscal support for the economy, figures are coming in strong. This bodes well for the earnings season there as well.

But something strange is happening: While stocks are up across the board, those sectors beating expectations the most aren’t doing particularly well. The most glaring example is the KBW Bank Index, which actually fell last week.

This may have to do with a lending slump that is worrying some analysts. Many also fear that the bar for cyclical sectors will still prove too high to clear: Profits in the consumer-discretionary sector are forecast to rise a whopping 96% and 141% from a year earlier in the U.S. and Europe, respectively. Historically, though, even optimistic profit expectations tend to be comfortably surpassed in recovery years.

There may be something broader at play. Around the middle of March, undercurrents that had driven markets since October suddenly shifted: Discounted stocks started underperforming, as did smaller ones, and “quality” firms—those with a lot of cash and less debt—staged a comeback. Meanwhile, Treasury yields have headed down a bit, and enthusiasm for public listings and special-purpose acquisition vehicles has waned.

Why is this happening? One possibility ventured by professional investors is that the market is worried about cost increases putting pressure on profit margins further down the line.

The worry is likely premature. Yet it is a testament to the fact that, during the pandemic, investors have anticipated the future earlier than usual. Last year’s bear market was both the fastest and shortest-lived ever; investors—perhaps thinking of the 2009 recovery rally—jumped back into equities after barely a month. By the fall, they were already starting to price in a post-lockdown consumer boom.

Now, they could be looking way past the immediate reopening. When compared with 2022 earnings expectations, share prices of consumer-facing firms appear more stretched than those in other industries. More generally, quality stocks tend to do better in later stages of an economic expansion, which the market may already be anticipating. “Old economy” sectors are underrepresented in this category.

While markets are always forward looking, the nature of the Covid-19 crisis may have stretched their discounting mechanism to a new extreme. This doesn’t mean “reopening” shares have run out of road, but investors need to think well beyond a vintage quarter for profits.

Write to Jon Sindreu at jon.sindreu@wsj.com