Investors are turning their attention to a heavy week of US corporate earnings after a sharp rebound in equities pushed major indexes to record highs.
The rally comes despite ongoing geopolitical tensions, with markets appearing to move past earlier concerns tied to the conflict involving Iran.
Hopes of easing tensions have helped fuel gains throughout the month.
The benchmark S&P 500 recently posted its first record close since late January, while the Nasdaq Composite also reached its first all-time high close since late October.
Focus shifts from war risks to corporate profits
Market participants are now looking toward first-quarter earnings, which are expected to provide strong support for equities.
Nearly one-fifth of S&P 500 companies are set to report results in the coming week.
Oil prices and inflation risks remain a concern
Despite the rally in equities, oil prices have remained elevated.
US crude was trading near $85 per barrel on Friday, compared with $67 in late February before the escalation in tensions.
Higher oil prices could create broader economic challenges.
Michael Mullaney, director of global markets research at Boston Partners, warned of potential risks tied to inflation and rising Treasury yields, as mentioned in a Reuters report.
Historic rebound lifts market sentiment
The recent rally has been swift and notable.
After falling about 9% from its January peak, the S&P 500 has surged roughly 12% since its March low, closing above the 7,000 level for the first time.
Data cited by Bespoke Investment Group showed that the index had never before returned to all-time highs in just 11 trading sessions following a decline of 5% to 10%.
Jim Reid, head of macro and thematic research at Deutsche Bank, described the rebound as remarkable.
“The velocity of this ascent has been nothing short of astonishing,” Reid said in a note, as cited in a Reuters report.
Tech stocks regain leadership
Megacap technology stocks, which had been hit during the earlier downturn, have played a key role in the recovery.
Companies such as Alphabet and Meta Platforms have rebounded, while the broader tech sector has outperformed.
The Nasdaq recorded its 13th consecutive session of gains, marking its longest winning streak since 1992.
Tesla leads key earnings week
Attention is now turning to upcoming earnings, with Tesla set to report results on Wednesday.
It will be the first of the so-called “Magnificent Seven” companies to release quarterly figures.
Other major companies reporting include Boeing, Intel, and Procter & Gamble.
Heavyweights such as Microsoft, Alphabet and Meta are expected to report in the following week.
S&P 500 earnings are projected to rise about 14% year-on-year in the first quarter, based on LSEG IBES data.
Economic outlook and rate path in focus
Investors will also watch developments around US monetary policy.
Kevin Warsh, President Donald Trump’s nominee to lead the Federal Reserve, is scheduled to testify before Congress.
Markets are currently pricing in no rate cuts this year, partly due to inflation risks linked to elevated energy prices.
Retail sales data for March, due Tuesday, could offer further insight into consumer strength.
Rising fuel costs, which have pushed gasoline prices to around $4 per gallon, may begin to weigh on spending.
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