Strong earnings optimism and trade hopes fuel Wall Street rally
U.S. stocks extended their winning streak on Monday, with the S&P 500 and Nasdaq Composite both reaching new record highs. A surge in megacap tech stocks and rising optimism over upcoming earnings helped propel the indexes, while expectations for a possible breakthrough in trade negotiations also lifted investor sentiment.
By mid-morning, the S&P 500 climbed 34.97 points, or 0.56%, to 6,331.90. The Nasdaq added 147.24 points, or 0.71%, hitting 21,042.87. The Dow Jones Industrial Average rose 201.87 points, or 0.46%, to 44,544.76, inching closer to its all-time high.
Verizon and tech megacaps drive sector gains
Verizon shares jumped 4.1% after the company raised its annual profit outlook. The communications sector followed suit, emerging as the top performer of the day. Meanwhile, the S&P’s information technology sector rose 0.6% to a fresh all-time high, bolstered by gains in most major tech names.
Investors are now looking ahead to key earnings reports from Alphabet and Tesla, both considered laggards among the so-called “Magnificent Seven” tech giants. Alphabet rose 2.1% while Tesla dipped slightly by 0.2%. Alphabet has slipped 0.2% year-to-date and Tesla is down 18.5%.
“It is going to be interesting to see the Tesla and Google reports,” said Horizon Investments’ Mike Dickson, who noted that the rally’s momentum could hinge on these results.
Tariff deadline looms but investor confidence holds
Despite the looming threat of U.S. tariffs, investors remained confident. President Donald Trump has warned of 30% tariffs on goods from Mexico and the EU starting August 1, with similar duties targeting imports from Canada, Japan and Brazil. However, Commerce Secretary Howard Lutnick expressed optimism about reaching an agreement with the European Union.
Still, EU officials appear to be preparing for a wider array of countermeasures, suggesting diplomatic breakthroughs may be out of reach before the deadline. Investors seem to be factoring in the possibility that the broader economic damage from tariffs could be less severe than initially expected.
Eyes on earnings, jobless claims, and Fed outlook
The market will be closely watching several key developments later this week. Economic data releases including jobless claims and the July business activity index could influence the Fed’s policy path. Federal Reserve Chair Jerome Powell is also set to speak Tuesday, with investors parsing his words for any policy signals.
Traders have largely dismissed the idea of a July rate cut, but expectations for a September cut remain around 56%, according to the CME FedWatch tool.
Market breadth was solid, with advancing issues outpacing decliners by a ratio of 3.02 to 1 on the NYSE and 2.58 to 1 on the Nasdaq. The S&P 500 saw 15 new 52-week highs, while the Nasdaq logged 73 new highs and 34 new lows.
