US stocks hovered around their record highs on hopes of September interest-rate cuts and as strong corporate earnings drove the biggest technology shares higher.
The S&P 500 Index and Nasdaq 100 rose 0.2% each as of 9:39 a.m. in New York. Dow Jones Industrial Average rose 0.3%.
A weak jobs report last week spurred expectations of rate cuts by the Federal Reserve next month. A slew of upbeat earnings also boosted sentiment. Palantir Technologies Inc. gained 8.5% after it reported a 48% increase in revenue due to the “astonishing impact” of AI on its business. Vimeo Inc. shares rose 7.1% after the video software company raised its 2025 forecast for adjusted Ebitda.
In the health-care space, Hims & Hers Health Inc. shares slumped 7.5% after the telehealth company reported second-quarter revenue that missed the average analyst estimate and analysts note weak sales trends for its weight-loss drugs. Pfizer Inc. shares jumped as it raised its profit forecast for the year, with the drugmaker’s ongoing cost cuts helping to make up for a lack of sales growth.
“The S&P 500 earnings are crushing the second quarter expectations — up 9.1%, triple the pre-season forecast and the strongest beat rate since 2021,” Gina Martin Adams, Bloomberg Intelligence’s director of equity strategy and chief equity strategist wrote in a note. “But now, with stocks near all-time highs, the question is whether this recovery still has legs.”
However, misses in large caps and small cap earnings are being punished sharply while beats are drawing only modest applause, according to BI.
While there’s been a growing chorus of voices on Wall Steet warning clients to prepare for a potential pullback, US stocks are still hovering near record highs. At least in the near-term, stocks could see an additional support from corporate buybacks.
“As US corporates emerge from the post-earnings blackout window, I believe there is capacity for increased share repurchase activity – particularly during August,” Scott Rubner, Citadel Securities’ head of equity and equity derivatives strategy wrote in a note to clients, adding that based on data over the past 100 years, the S&P 500 typically tends to rally during the month of August, closing the month on the highs.
Beyond Earnings
On the strategy side, HSBC strategists boosted their year-end target for the S&P 500 to 6,400 points from 5,600, citing robust corporate earnings and easing policy uncertainty.
Outside of earnings, traders are still focused on the Fed’s next move after Friday’s weak jobs report. San Francisco Fed’s Daly said the time is nearing for rate cuts, Reuters reported. Daly cited mounting evidence that the job market is softening and said there are no signs of persistent tariff-driven inflation.
On the tariff front, US President Donald Trump said he would be “substantially raising” the tariff on Indian exports to the US over the Asian nation’s purchases of Russian oil, a move New Delhi slammed as unjustified in an escalating fight between the two economies.
Trump also said that US tariffs on semiconductor and pharmaceutical imports would be announced “within the next week or so,” as the administration prepares to target key economic sectors in its effort to remake global trade.
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