The S&P 500 rose 1.48% Monday to 7,610.04, not far from its all-time high, while the Dow Jones Industrial Average closed at a record and the Nasdaq Composite jumped 2.12%. The rally carried into Tuesday's European session even as oil prices rebounded on lingering U.S.-Iran tensions, and 84% of the S&P 500 companies that have reported second-quarter results so far have beaten earnings estimates.
The S&P 500 rose 1.48% Monday to 7,610.04, not far from its all-time high of 7,620.90. The Dow Jones Industrial Average closed at a record high the same session, and the Nasdaq Composite jumped 2.12%.
Gains carried into Tuesday even as oil prices bounced back, underscoring market scepticism that the U.S.-Iran war would be resolved quickly through diplomacy. Brent futures rose 1.5% to $85.05 a barrel, reversing part of a 7% drop in the previous session to a three-week low. Yet Nasdaq futures climbed 0.77% and S&P 500 futures increased 0.20% ahead of the open.
Earnings beats offset caution on yields
Nearly two-thirds of S&P 500 companies have now reported second-quarter results, and 84% have beaten earnings estimates, according to LSEG data and market participants.
However, longer-dated U.S. Treasury yields rose to a 19-year high last week after comments from Federal Reserve Chairman Kevin Warsh raised concerns the Fed may not act aggressively to head off inflation. Most analysts believe Warsh does not want to hike rates, though, and the first round of U.S. jobs data is due later Tuesday, which could give him enough cover to hold steady.
Societe Generale sees the S&P 500 at 8,000
Manish Kabra, lead U.S. equities and multi-asset strategist at Societe Generale, said: "Market leverage is high, but a reversal requires aggressive tightening and a yield-curve inversion." He added that a yield-curve inversion is not Societe Generale's base scenario, and the bank sees the S&P 500 reaching 8,000.
Elsewhere, some economists cautioned that Europe's economy faces a tougher outlook than other regions, as drought hampers Rhine shipping and gas inventories remain under pressure.
Source: Economy News
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