U.S. Markets Hit New Highs as Earnings Season Gains Momentum

U.S. equities surged to fresh record highs on Monday as investors entered a pivotal earnings week with optimism. The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all posted new intraday peaks, driven by strength in megacap technology stocks and upbeat early earnings reports. Market sentiment remains broadly positive, even as tariff risks and Federal Reserve policy continue to linger in the background.

Tech Megacaps Set the Tone

The S&P 500 rose 0.56%, the Nasdaq gained 0.71%, and the Dow climbed 0.46% during Monday’s session. Leading the advance were members of the so-called "Magnificent Seven," including Tesla (NASDAQ: TSLA) and Alphabet (NASDAQ: GOOGL), both scheduled to report later this week. Investors are positioning for upside surprises following strong results from Nvidia (NASDAQ: NVDA), AMD (NASDAQ: AMD), and Taiwan Semiconductor (NYSE: TSM), which reinforced bullish sentiment across AI-driven sectors.

The tech rally has widened beyond AI, lifting software and communications stocks as well. Meta (NASDAQ: META) and Apple (NASDAQ: AAPL) are also on watch, with earnings scheduled in the coming weeks.

Early Earnings Support the Rally

Roughly 85% of S&P 500 companies reporting so far this week have beaten analyst expectations. Verizon (NYSE: VZ) delivered a standout report, exceeding both revenue and earnings estimates and raising its full-year guidance. That helped propel the broader communications sector and contributed to market breadth, reducing reliance on a narrow group of outperformers.

Retail sales and inflation data released last week have also come in line with expectations, adding to confidence that the soft landing narrative remains intact. The combination of solid earnings and steady macro data continues to justify elevated equity valuations—for now.

Tariff Risks and Fed Uncertainty Remain

While earnings remain the primary driver, trade policy is emerging as a potential disruptor. A pending August 1 deadline for new tariffs on EU imports and renewed threats of escalation in U.S.–China trade tensions have reentered investor focus. Any policy surprises on this front could reprice risk quickly, particularly in sectors reliant on global supply chains.

At the same time, the Federal Reserve remains in a holding pattern. Traders are currently pricing in a roughly 56% chance of a rate cut at the September FOMC meeting. However, most expect no change at the upcoming July decision. Fed officials have reiterated their data-dependent stance, which means upcoming inflation and labor market reports will be closely watched.

Valuations Stretch, but Sentiment Holds

The S&P 500 has now cleared 6,300 and the Nasdaq has topped 21,000—both significant psychological and technical levels. While these milestones underscore the strength of the current bull run, they also raise questions about sustainability. Several analysts have flagged elevated price-to-earnings ratios and signs of investor complacency.

Still, historical post-earnings-announcement drift (PEAD) suggests that positive results tend to drive further gains over the following weeks. That dynamic may support equities through late July, but seasonal volatility typically returns in August and September. Traders should stay alert for shifts in momentum or macro catalysts capable of reversing the current trend.

Tips for Traders

• TSLA and GOOGL earnings could serve as inflection points—strong beats may reinforce tech leadership, while misses could trigger rotation.

• NVDA, AMD, TSM remain momentum names—watch for consolidation or continuation as AI narrative persists.

• VZ may offer relative strength if guidance holds—supportive for communications sector positioning.

• US100 rally hinges on sustained earnings strength—volatility risk grows as valuations stretch.

• Tariff headlines or Fed commentary could spark sudden corrections—stay tactical around policy-driven sessions.