S&P500 and Nasdaq: Tech Stocks Face Earnings Test as US Indices Hold Steady

Market Holds Steady Despite Record Highs as Earnings Season Intensifies

Major indices traded in a tight range Tuesday as traders digested mixed earnings results and assessed stretched valuations following recent record closes. The S&P 500 held flat while the Nasdaq slipped 0.2%, with the Dow managing a modest 40-point gain.

Earnings Beat Rate Stays Strong, But Revenue Misses Pile Up

Corporate results continue delivering solid numbers, with 82% of the 88 S&P 500 companies reporting so far beating analyst estimates according to FactSet. However, revenue disappointments are creating headwinds, particularly in defense and consumer sectors.

Lockheed Martin plunged 8% after quarterly revenue of $18.16 billion missed the $18.57 billion consensus, while the company disclosed a staggering $1.6 billion loss on legacy defense programs. Philip Morris dropped 7% on similar revenue shortfalls, signaling potential margin compression in traditional sectors.

Magnificent Seven Results Could Drive Next Market Move

All eyes turn to Wednesday’s earnings from Alphabet and Tesla, marking the start of the critical Magnificent Seven reporting period. These megacap tech names are expected to drive significant earnings growth this quarter, with traders particularly focused on AI spending commentary and demand outlook.

The heightened anticipation comes as some analysts warn valuations have stretched too far.

Cetera Investment Management’s Gene Goldman noted that “much of the good news appears to be priced in, leaving little margin for error.”

He highlighted how the S&P 500’s recovery from the recent 4,982 low represents the fastest bounce in nearly 50 years, even as 2025 earnings expectations were cut in half.

Sector Rotation Continues as Retail Traders Chase Memes

Individual stock moves reflected ongoing sector rotation and retail trading influence. Opendoor Technologies surged over 13%, extending its meme stock rally to more than 500% this month on explosive 1.9 billion share volume – 1,700% above its three-month average.

Housing stocks showed strength with D.R. Horton jumping 7% on earnings of $3.36 per share versus $2.89 expected, while PulteGroup added 1% after beating estimates.

Market Outlook: Caution Warranted Despite Momentum

The current setup presents a classic late-cycle scenario where strong fundamentals meet elevated valuations. With earnings beats remaining robust but revenue growth slowing, traders should watch for any guidance cuts from upcoming tech reports.

The market’s ability to digest stretched multiples will likely depend on AI spending acceleration and sustained corporate optimism about the second half demand outlook.

More Information in our Economic Calendar.