July 21, 2025

Wall Street is on track for fresh record highs as a pivotal earnings week begins, with investors closely watching corporate guidance amid growing trade tensions. The S&P 500 has climbed past the 6,300 mark, bolstered by optimism around resilient profits and continued strength in consumer demand.

Focus Shifts to Corporate Outlook

With few economic data releases this week, markets are firmly fixed on earnings. Two members of the “Magnificent Seven” — Tesla and Alphabet — are set to report results, offering critical updates on AI investment trends and future growth.

Meanwhile, trade policy is back in the spotlight, as the U.S. and European Union head into intense negotiations. President Trump has threatened to impose 30% tariffs on most EU exports by August 1, unless a deal is reached — a move that could disrupt global supply chains and trigger retaliatory measures.

Market Highlights:

• S&P 500 tops 6,300, supported by strong early earnings reports.
  
• U.S. Treasury yields and the dollar fell, giving a lift to equities.
  
• Japanese yen strengthens, after PM Shigeru Ishiba confirms he’ll stay in office following an election setback.
  
• Earnings misses are being punished more severely than at any point since 2022, per Bloomberg data.
  

Valuations Stretched, but Tech Remains a Pillar

The S&P 500’s 22x forward earnings multiple suggests limited room for disappointment. Yet large-cap tech remains a cornerstone of investor confidence, with firms like Microsoft, Apple, and Nvidia continuing to benefit from strong margins, robust demand, and dominant positions in AI.

Outlook

The combination of declining inflation, steady interest rates, and resilient earnings provides solid footing for equities, even as trade tensions introduce near-term risks. This week’s results — especially from megacap tech and consumer leaders — will be crucial in gauging the market’s next leg.

Investors are advised to remain selective and nimble, with a focus on quality companies with pricing power, tech exposure, and strong cash flows, while keeping a close eye on the outcome of U.S.–EU trade negotiations.

Stay tuned for continued updates throughout earnings season and global policy developments.