Earnings momentum is carrying the stock market to record highs

Briefing.com Summary:

*The Dow and S&P 500 have reached new record highs, bolstered by impressive earnings results.

*The Q2 blended earnings growth rate for the S&P 500 is a massive 50.1%, according to FactSet.

*Reactions have been mixed to a barrage of earnings results since yesterday’s close.

It was quite a move by the stock market yesterday, which saw the Dow Jones Industrial Average and S&P 500 vault to new record highs, carried by earnings momentum, lower oil prices, lower Treasury yields, mega-cap leadership, and speculative energy.

Those forces are not all in play this morning, but nonetheless the stock market is still sticking with a predominately bullish bias.

Currently, the S&P 500 futures are up 36 points and are trading 0.3% above fair value, the Nasdaq 100 futures are up 62 points and are trading fractionally below fair value, and the Dow Jones Industrial Average futures are up 220 points and are trading 0.3% above fair value.

There has been a barrage of earnings news since yesterday’s close. We’ll call the reaction to the results somewhat mixed, but the Q2 results, in aggregate, are still much better than expected in most cases.

Just how good have the results been? The blended Q2 earnings growth rate for the S&P 500 sits at a scintillating 50.1%, according to FactSet, versus a projected 18.3% at the end of the first quarter. Reports have suggested that large gains on equity investments for many of the largest companies have skewed the growth rate, but absent those gains, Q2 growth is still far exceeding estimates.

Luminaries such as Advanced Micro Devices (AMD), Booking Holdings (BKNG), CVS Health (CVS), Eli Lilly (LLY), SpaceX (SPCX), Uber (UBER), and Walt Disney (DIS) are among the most recent batch of reporters that have surpassed Q2 earnings expectations. They aren’t all trading higher after their reports, but objectively, they have kept the Q2 reporting momentum going.

SpaceX, AMD, and Uber are notable laggards in pre-market action, trading down 10%, 8%, and 3%, respectively, whereas Booking, Eli Lilly, Disney, and CVS are up 8%, 5%, 2%, and 1%, respectively.

There are nuances behind each reaction, such as concern over SpaceX’s negative free cash flow, exceedingly high expectations for AMD, and plain old dominance by Eli Lilly. The point is that the stock market, overall, remains rooted in the good earnings news far more than it is in isolated price action.

The recent slide in oil prices and Treasury yields, which have coincided with reports of peace talk dealings between the U.S. and Iran and the likelihood of a full reopening of the Strait of Hormuz soon, have been added sources of support for the broader market.

WTI crude futures have dropped nearly 10% this week alone to $76.35/bbl, and the 10-yr note yield has come down nine basis points to 4.62%.

This morning’s ADP Employment Change report for July kept the 10-yr note in line with its recent trend, as it was on the softer side of expectations. Private sector employment increased by 44,000 jobs (Briefing.com consensus: 75,000), with the service-providing sector (+47,000) leading the goods-producing sector (-3,000) in terms of job creation.

This report precedes the July ISM Services PMI (Briefing.com consensus: 54.7%; prior 54.0%) at 10:00 a.m. ET and Friday’s Employment Situation Report for July, which is estimated to show nonfarm private payrolls growth in the neighborhood of 70,000.

The stock market will bide its time until then, armed with the satisfaction of having reached new highs, not in a flash sale but in a flash purchase. Over the past four sessions, the S&P 500 has increased approximately 420 points, or 5.8%, driven in part by a fear of missing out on further gains.

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Originally Posted August 5, 2026 – Earnings momentum is carrying the stock market to record highs