Wall Street goes risk-on as trade optimism grows

As the earnings season rolls in, companies in the US equity benchmark are on course to deliver the highest sales beat ratio since 2021

Wall Street’s hopes the US and China are nearing a trade deal lifted the riskier corners of the market, with stocks hitting record highs amid a rally in the crypto world. Bonds, gold and the dollar fell.

The S&P 500 rose almost 1% as Chinese and US trade negotiators have lined up an array of diplomatic wins for Donald Trump and Xi Jinping to unveil at a summit this week. With further Federal Reserve interest-rate cuts on the way, the profit outlook is looking increasingly brighter.

“Stocks are starting a busy news week with fading US-China trade tensions, and that lifts some uncertainty from markets,” said Clark Bellin at Bellwether Wealth. “This is a consequential week, with a Federal Reserve meeting and nearly every mega-cap tech company’s earnings.”

As the earnings season rolls in, companies in the US equity benchmark are on course to deliver the highest sales beat ratio since 2021. American firms appear to be fairly unscathed by tariffs so far, protecting their margins through price increases and cost cuts. The view among strategists is that the strongest earnings and sales growth remains concentrated in technology stocks.

On Wednesday and Thursday, five firms that account for about a quarter of the S&P 500 — Microsoft Corp., Alphabet Inc., Meta Platforms Inc., Amazon.com Inc. and Apple Inc. — will report their earnings. Beyond the glimpse into their businesses, investors will be focused on their outlooks for artificial-intelligence development.