S&P 500 up 30%, Nasdaq up 50% in half a year. Wall Street expects another quarter of earnings, even amid U.S. tariffs on China.
Wall Street expects another earnings season after AI rally, despite Trump’s tariff pressure
Despite Friday’s selloff, U.S. stock markets remain near all-time highs. The S&P 500 is up more than 30% from its April lows, and the Nasdaq Composite is up 50%, in one of the strongest half-year rallies in history.
S&P 500 earnings are expected to rise 8% year-over-year in the third quarter, according to FactSet, marking the ninth straight quarter of earnings growth.
Analysts: Market Not in a Bubble Yet
Goldman Sachs experts believe that the current rally has a fundamental basis, and leading companies demonstrate “unusually strong balance sheets.”
UBS analysts predict that global investments in artificial intelligence will grow by 67% in 2025.
“The market remains supported by stable fundamentals, accelerated technology adoption and a favorable macro situation,” UBS strategists noted.
Right now, as investors joke, there is simply nowhere to “buy dips” — there have been almost none.
AI Sectors Lead the Market
AI-related sectors remain the leaders:
- Technology (XLK)
- Communications Services (XLC)
- Industrials (XLI)
- Energy & Utilities (XLU)
These indexes are near all-time highs, and analysts are raising their targets for the S&P 500.
However, not everyone shares the optimism.
“The U.S. market has been overvalued for a long time,” says Jim Masturzo of Research Affiliates, adding that investors are relying too much on expectations of rate cuts.
Fed Policy and Trump’s New Tariffs
The Federal Reserve’s minutes suggest that the regulator could cut rates as early as this month if the labor market continues to weaken.
This supports optimism among investors and consumers who are feeling less financial pressure.
Delta shows recovery
Amid all this, Delta Air Lines reported a “significant improvement” in its earnings forecast and expects $6 per share, the top end of its previous range.
CEO Ed Bastian said business travel and premium segments are growing again, even despite tariff risks.
Bottom line
AI growth, expectations of rate cuts and solid corporate earnings are creating an optimistic mood on Wall Street.
But new tariffs, inflation risks and signs of market overvaluation leave room for caution — because even the strongest rally can’t last forever.
Related: Adam Mosseri: AI will change the concept of creativity
