S&P 500 and Nasdaq: Can Tesla and Alphabet Sustain the Bullish Momentum?

Major Indexes Rally on US-EU Trade Deal Reports

Wall Street extended its rally Wednesday as major indexes posted solid gains following reports that the United States and European Union are nearing a comprehensive trade agreement.

The Dow Jones surged 464.69 points (+1.04%) to 44,967.13, while the S&P 500 gained 38.93 points (+0.62%) to 6,348.55, and the Nasdaq climbed 75.04 points (+0.36%) to 20,967.73.

US-EU Trade Deal: Will 15% Tariffs Reset Global Commerce?

Financial Times reported that negotiators are finalizing a deal setting 15% tariffs on European imports, with both sides waiving duties on aircraft, spirits, and medical devices.

This follows Trump’s recent Japan agreement slashing auto tariffs from 27.5% to 15%, with other goods dropping from 25% to 15%. The Philippines deal also delivered modest tariff reductions.

The VIX fear gauge hit five-month lows as trade optimism dominated sentiment. However, the European Commission prepared 93 billion euros ($109 billion) in counter-tariffs as backup, highlighting the high stakes involved.

Magnificent Seven Earnings: Can Tech Giants Deliver?

Tesla and Alphabet headline Wednesday’s after-hours earnings releases, setting the tone for the tech-heavy earnings wave.

Analysts expect Alphabet to report $2.17 per share (+14.8% year-over-year) on $93.7 billion revenue (+10.6%). Search advertising strength could offset AI competition concerns and regulatory headwinds.

Tesla faces tougher scrutiny after delivering 384,122 vehicles in Q2, down 13.5% year-over-year. Wall Street forecasts 44 cents per share (-15.4%) on $22.7 billion revenue (-11%). CEO Elon Musk’s political activities add another layer of uncertainty for the EV maker.

Sector Rotation Continues as Industrials Lead

GE Vernova rocketed 14.1% to all-time highs after raising full-year guidance and beating Q2 estimates, boosting industrials (+1.6%). Thermo Fisher surged 11.8% on strong quarterly results. Of 117 S&P 500 companies reporting, 84.6% have beaten analyst expectations.

Semiconductor weakness persisted as Texas Instruments plunged 12.1% on disappointing guidance, dragging peers NXP, Analog Devices, and ON Semiconductor down 2.7% to 6.7%. Tariff uncertainty continues pressuring chip demand forecasts.

Federal Reserve Rate Cut Odds Stabilize

Economic data showed existing home sales fell more than expected in June, while traders ruled out a Fed rate cut next week. September cut probability stands at 58% according to CME FedWatch. Thursday’s jobless claims and PMI flash data will provide fresh economic health indicators.

Market Forecast: Trade Optimism Supports Near-Term Upside

The combination of trade deal progress and strong earnings momentum supports continued market strength in the near term.

With advancing issues outpacing decliners 1.97-to-1 on NYSE and 1.91-to-1 on Nasdaq, breadth remains healthy.

However, stretched tech valuations and upcoming Magnificent Seven earnings create potential volatility catalysts.

Focus on trade negotiation headlines and tech earnings quality for directional cues.

More Information in our Economic Calendar.