Wall Street Rallies on Earnings Amid Tariff Concerns/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. stocks edged higher Tuesday as investors weighed corporate earnings, Federal Reserve policy, and tariff negotiations. The S&P 500 hit another record while the Nasdaq climbed, boosted by tech and travel stocks. Market optimism is tempered by concerns over inflation, tariffs, and economic growth.
Wall Street Rally + Quick Looks
- S&P 500 rose 0.2%, setting its seventh straight record
- Nasdaq added 0.5%, led by tech and financials
- Dow Jones Industrial Average remained flat early Tuesday
- JetBlue and SoFi Technologies surged 14% and 16%, respectively
- Merck dropped 7.8% on weaker-than-expected profit results
- Fed begins two-day policy meeting, expected to hold interest rates steady
- Investors await economic data and job market updates this week
- Tariff talks between U.S. and China continue, with an Aug. 12 deadline looming
- Trump’s proposed tariffs on other countries set to hit Friday
- Global markets mixed, with Japan’s Nikkei down 0.8% and European indexes up
Deep Look: Wall Street Eyes New Records as Earnings, Tariff Talks Shape Market Momentum
NEW YORK (AP) — Wall Street began Tuesday with cautious optimism as major U.S. indexes climbed, continuing a strong upward trend driven by robust earnings and cautious Federal Reserve policy. The S&P 500 gained 0.2%, notching its seventh consecutive record high, while the Nasdaq rose 0.5%. The Dow Jones Industrial Average was unchanged in early trading.
Investors are entering one of the most pivotal weeks of the summer, balancing a torrent of corporate earnings with critical geopolitical developments, including trade talks and looming tariffs.
Earnings Drive Momentum
A wave of quarterly earnings reports has helped power the market forward. So far, nearly one-third of the S&P 500 companies are reporting this week, with early results offering both encouragement and caution.
JetBlue Airways surged 14.4% after issuing an upbeat forecast that exceeded analyst expectations, and SoFi Technologies jumped 16.2% following stronger-than-anticipated revenue growth in the fintech sector. Meanwhile, Beyond, the parent of Bed Bath & Beyond and Overstock, climbed 3.4% despite reporting a $19 million quarterly loss, which was better than analysts had predicted.
Still, the market is quick to punish underperformance. Merck tumbled 7.8% after its profit report disappointed investors, and UnitedHealth Group slid 5.1%, revealing lower-than-expected earnings and a 2025 forecast that failed to meet Wall Street’s projections. UnitedHealth’s 2025 guidance of at least $16 per share missed analyst expectations of nearly $20, according to FactSet.
“Markets are rewarding surprise upside, but there’s no tolerance for weak guidance right now,” said Tori Morgan, equity strategist at Vanguard.
Fed Eyes Tariff Impact, Holds Rates
Adding to the week’s weight is the Federal Reserve’s two-day meeting, where policymakers are expected to hold interest rates steady, currently near 4.3%. While President Donald Trump has renewed pressure for rate cuts to stimulate the economy, Fed officials appear inclined to wait for more data, especially on how tariffs might be impacting inflation and broader economic performance.
Trump has argued inflation is under control, but recent consumer price data shows prices rising again, with June inflation hitting 2.7%, up from 2.4% in May — still above the Fed’s 2% target. Investors widely believe the Fed will delay any rate cuts until at least September.
“The Fed doesn’t want to move until it sees whether Trump’s tariffs add a new inflationary layer,” said economist Rachel Bloom of Bank of America.
Global Trade in the Spotlight
Beyond domestic earnings and Fed decisions, attention has turned to ongoing U.S.-China trade negotiations. Treasury Secretary Scott Bessent is meeting with Chinese Vice Premier He Lifeng in Stockholm to try and avert a breakdown in the current trade truce. Without an agreement by August 12, a new round of triple-digit tariffs could take effect.
This week also includes a Friday deadline for Trump’s proposed new tariffs on imports from several nations. These tariff threats have put pressure on foreign markets and raised concerns that escalating trade tensions could undermine global growth.
Despite these risks, Asian and European markets remained largely positive, with the exception of Japan’s Nikkei, which fell 0.8%. Bond markets were also relatively calm, with the 10-year U.S. Treasury yield easing to 4.39%, down slightly from 4.42% on Monday.
What’s Ahead
Investors are also bracing for key U.S. economic data, including Friday’s July employment report, which could provide critical insight into whether job growth is strong enough to support the Fed’s patient stance.
The current rally in stocks has led some analysts to question whether valuations have grown too high. Still, most agree that as long as corporate earnings meet or exceed expectations, the momentum can continue.
“There’s a lot of risk baked into this week,” said Julian West, strategist at Charles Schwab. “But if earnings stay strong and the Fed doesn’t spook markets, there’s more room to run.”
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