As Earnings Season Heats Up, Will the Market Rally Hold?
With the S&P 500 and Nasdaq hovering near record highs, investors are entering a critical stretch where corporate earnings—not tariff headlines or political noise—will need to do the heavy lifting.
After months of market-moving headlines from the White House and speculation over the future of the Federal Reserve, Wall Street is refocusing on fundamentals. With Big Tech set to report this week and Q2 earnings season in full swing, the next chapter of the 2025 market rally is being written—not in Washington, but on corporate balance sheets.
Earnings Season Arrives Right on Time
So far, the numbers are encouraging. According to Fundstrat, 85% of the S&P 500 companies that have reported have topped estimates, with a median beat of 4%. This earnings strength has already helped push the Nasdaq to a new record and lifted the S&P 500 to within striking distance of all-time highs.
Analysts expect second-quarter earnings growth to hit 5.6%, up from 4.9% projected just a few weeks ago. Some, like State Street’s Michael Arone, are even more bullish, forecasting 9% year-over-year growth. If realized, that would be enough to keep the rally alive—even in the face of rising macro risks.
But it’s not just the numbers that matter—it’s the tone of the outlooks. As U.S. Bank strategist Thomas Hainlin noted, this is the first real chance to hear how companies are managing the impact of tariffs that took effect in April.
Tariffs and Fed Uncertainty: Background Noise or Emerging Risk?
President Trump’s 10% minimum tariff took effect on April 5, and more aggressive levies are threatened for August 1 unless additional trade agreements are reached. Historically, Trump’s rhetoric has been met with skepticism on Wall Street—thanks in part to the now-popular “TACO trade” (Trump Always Chickens Out)—but faith in reversals may be wearing thin.
Moreover, Trump’s public campaign against Fed Chair Jerome Powell briefly rattled markets last week, before a denial from the president cooled investor nerves.
Still, investors remain cautiously optimistic, betting that positive earnings and economic data will outweigh policy risk, at least for now.
What to Watch This Week
A parade of high-impact earnings is on deck. This includes:
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Alphabet (GOOGL, GOOG) and Tesla (TSLA) on Wednesday
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Coca-Cola (KO) on Tuesday
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Intel (INTC), Blackstone (BX), Deutsche Bank (DB), and Nasdaq Inc. (NDAQ) on Thursday
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T-Mobile (TMUS) and AT&T (T) also report midweek.
Investors will be paying close attention to not just earnings per share and revenue, but also spending on artificial intelligence, tariff-related commentary, and forward guidance, especially from Big Tech.
Seasonality Is the Wildcard
While strong earnings could carry the market higher, historical patterns suggest caution. According to SentimenTrader’s Jay Kaeppel, the period from late July to mid-October is statistically the weakest for U.S. equities. Following a rally of more than 25% off the April lows, even bullish strategists suggest it may be time to trim exposure or brace for a pullback.
Former Goldman Sachs strategist Scott Rubner, now at Citadel, warned that corporate buyback support may fade and that unprofitable tech names—many of which have surged—could lead any correction.
The Bottom Line
The summer rally is running strong, powered by resilient earnings and a surprisingly stable economy. But with valuations stretched, seasonal trends turning less favorable, and geopolitical uncertainty simmering, this week’s earnings will be pivotal.
If companies can deliver solid results and offer confident guidance despite the crosswinds of tariffs and monetary policy, the rally could grind higher. But if Big Tech disappoints or forward guidance turns cautious, markets may be in for a late-summer breather.
One thing is clear: The next move in this market won’t be made in Washington or the Fed—it’ll come from the earnings stage. And the spotlight is on.