S&P 500 Hits Record Highs: Analyzing Earnings and Market Momentum

Let's get to the big story breakdown as a new trading week gets underway, the S&P 500 hitting new record highs.

The index notched its 10th record close of the year, with Verizon leading the charge, jumping 4% after raising its earnings outlook, helping to drive momentum across the market.

While early earnings last week were led by big banks and industrials, with over 80% of companies beating expectations.

We also saw inflation figures that were. dampening hopes for a July rate cut, but this week on top of earnings, we do get the 25th EU China summit taking place with talks between the president of the EC as well as China's president.

Joining me this morning is Michael Rankin, senior market strategist for the New York Stock Exchange.

Michael, good morning.

Thank you so much for joining me.

Good morning, Remy.

Thanks for having me back on.

Well, here we are.

We are looking at a flat too mixed open, but we saw the S&P 500 hit new record highs yesterday.

We are seeing earnings coming in.

So what do you make of what we're seeing so far?

Yeah, look, I mean this week is really kind of all about earnings.

You know, we had the S&P 500 closing right around 6300 at the end of last week.

It was options exploration.

We've had two consecutive weeks where the index is traded in a pretty tight range.

I think some of that options hedging activity likely is suppressed a little bit.

Volatility over the last week, you know, especially, so we started to see a little bit of an expansion of volatility yesterday to the upside for most of the session, you know, as we had some of that hedging roll off, but this week is really all about earnings, right?

The numbers have been coming in pretty solidly, which is something we've become pretty accustomed to right in general, the bar gets lowered enough for companies to beat that, you know, the big.

The question this time around is really can the stocks continue to move higher given the fact that we're coming off of a 25% rally off the lows, right?

So you know the expectations for the numbers have been sufficiently lowered, but the price expectations are a little bit harder.

Yeah, and speaking of which, what are the risks to the rally and should we be concerned yet once again about concentration risk?

Yes, so I think right now.

I mean the risk where there is a known kind of unknown right at this point in terms of the administration and we're starting to see the administration turn up the volume on trade again, right?

So if you rewind the clock, you know, back to April, right, that led to quite a bit of volatility.

Markets have become a little bit desensitized to that, you know, kind of at this point, but it does feel like, you know, with the.

The administration seems to kind of be working off of this assumption that they have a little bit of you know kind of room to work with given the markets are at all-time highs, right, so I wouldn't, you know, necessarily be shocked to see kind of them continue to press the ball there, you know, the, it seems like, you know, the risks around kind of the Federal Reserve seem to be easing over the last, you know, kind of the last couple of days, you know, we've heard some commentary coming from, you know, Treasury Secretary Besset.

President Trump has also kind of backed off of some of his initial of some of the stories that were out there last week about, you know, replacing the replacing the chair and then I think, you know, the other you know kind of pieces just to continue to watch kind of economic data and see if we do start to see any of the impacts of tariffs start to feed through in the next month or so.

Yeah, and Michael, you bring up an important point because we're all watching that August 1st deadline and this morning I was looking.

At the calendar, it is July 20 and August is right around the corner actually next week, and that means not only do we have that tariff deadline, but we also have that jobs report, believe it or not, it's that time again.

But given the fact that the S&P 500 is trading at 26 Ford earnings and we're seeing record highs, what do you expect to see in the upcoming sessions as we end the month of July?

Yeah, so I mean look, like I said, I think it's really earnings we start to get.

Um, we start to hear from some of the bigger tech companies, you know, in a day or two.

You know, last night we heard from NXPI, you know this, you know, kind of goes to the point I was making earlier, right?

NXPI had pretty solid numbers.

The stocks trading down in the in the in the pre-market, the call's ongoing now, so I, I haven't listened to the commentary, but the numbers look pretty solid, right?

You know we saw some of that last week as well, where you had companies like GE or 3N that were beat and raised. you know, really, really solid numbers, you know, kind of stocks that had backed off, right?

So I think you know just we're in this period where you know I wouldn't be shocked to see some digestion.

If you look at like historically, you know, kind of the month of July just tend to be, you know, very strong.

The first two weeks of that is where much of that strength, you know, tends to occur as we move into August, September time frame, you know, markets are a little bit more choppy in in that in that time period from a seasonal perspective, right, so.

I think it'd be healthy for, you know, kind of a little bit of a pullback, some sideways action here to kind of, you know, rebuild up some strength as we head into Q4.

OK, Michael, well thank you so much for joining us this morning.

I look forward to speaking with you again next week.

All right, thanks for having me.

See you next week.