Ahead of today’s open, the equity futures market is pointing to a higher start, and a like-minded start, for the major indices. Currently, the S&P 500 futures are up eight points and are trading 0.1% above fair value, the Nasdaq 100 futures are up 15 points and are trading 0.1% above fair value, and the Dow Jones Industrial Average futures are up 67 points and are trading 0.1% above fair value.
Buyers have a hold on the market, so to speak, largely because they have not identified a fundamental catalyst yet that would cause them to lose their grip. Yes, valuations are stretched, but there hasn’t been anything in the earnings guidance from companies that have reported so far that has convinced participants that the premium multiple isn’t warranted.
This week will feature earnings reports from nearly 140 S&P 500 companies, including Tesla (TSLA) and Alphabet (GOOG), that will provide more insight on whether the market can sustain its premium valuation.
Verizon (VZ), Domino’s Pizza (DPZ), and Roper (ROP) led this morning’s reporting activity, and the responses to their reports have been mixed.
Sliding Treasury yields have offered some valuation support. The 2-yr note yield is down three basis points to 3.85%, and the 10-yr note yield is down six basis points to 4.37%. Market participants seem to be taking some solace in a Wall Street Journal report that Treasury Secretary Bessent talked President Trump out of firing Fed Chair Powell.
The president refuted that reporting, but in any case, the market is consuming the chatter as a positive. Notably, sovereign bond yields are down pretty much across the board today, reportedly comforted by the thought that there hasn’t been any upheaval after Japan’s LDP and its ruling coalition lost their majority position in the upper house following a weekend election.
Leading up to the election, there was a good bit of concern that the success of populist parties in Japan could drive up stimulus spending and debt issuance to pay for the stimulus. That could still be the case, but the reserved response for now has been construed as a positive. Japan’s market was closed Monday for a holiday.
Elsewhere, the People’s Bank of China left its 1-yr and 5-yr loan prime rates unchanged at 3.00% and 3.50%, respectively, and Commerce Secretary Lutnick expressed optimism about trade deals coming to fruition, telling CBS News that “the next two weeks are going to be weeks for the record books.”
His optimism also stretched to the possibility of the U.S. and the EU striking a deal before the August 1 “hard deadline.” The EU, reportedly, is ready to launch countertariff measures if there is no deal.
President Trump and Chinese President Xi Jinping look to be on course to meet during the APEC Summit in late October, according to the South China Morning Post.
Right now, though, the stock market is on course to digest a lot of important earnings news and guidance, the totality of which is going to determine where it goes from here (that being record-high levels).
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Originally Posted on July 21, 2025 – Earnings guidance to dictate where market goes from here
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