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Forecasts for earnings, one of the fundamental factors that drives stock prices, are rising fast as analysts factor in benefits from the U.S. tax overhaul.

Optimism over forecasts has caught the attention of anxious investors, who hope that strong earnings can support lofty stock valuations and offset the concerns over rising bond yields and the pace of Federal Reserve rate hikes. Rising interest rates in general mean higher borrowing costs for companies.

This week, fears of higher rates overwhelmed the upbeat profit picture as the benchmark S&P 500 stock index .SPX fell 3.9 percent and raised some concern about a deeper pullback.

"This uptick in bond rates has everybody nervous obviously," said Gary Bradshaw, portfolio manager at Hodges Capital Management in Dallas, Texas.

"But we step back and look, and so far earnings have been awful good. Even though you have seen rates move up some here, they are still very low, inflation is still low," he said.

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