Stock market today: S&P 500, Nasdaq on pace for new records as earnings roll in

US stocks closed at new record highs on Thursday, with the S&P 500 and Nasdaq extending their record-setting runs, fueled by strong corporate earnings and positive economic indicators. TSMC reported record quarterly profit driven by robust AI demand, lifting chipmaker shares, while PepsiCo posted a surprise revenue increase. Concurrently, June retail sales rebounded and initial jobless claims fell to a three-month low, signaling a healthy consumer. This positive sentiment prevailed despite ongoing attention to President Trump's pressure on the Federal Reserve, with investors largely anticipating a rate hold.

Analysis

U.S. equities reached new record highs, with the S&P 500 gaining 0.7% to close just under the 6,300 mark and the Nasdaq Composite also climbing 0.7% to a new peak. This market strength is underpinned by strong fundamental data, which is currently overshadowing political rhetoric concerning the Federal Reserve. Corporate earnings provided a significant tailwind, exemplified by TSMC (TSM) posting a record quarterly profit fueled by strong AI demand, which subsequently lifted other chipmaker stocks. Similarly, PepsiCo (PEP) reported a surprise revenue increase, though it did revise its 2025 profit forecast downward. The narrative of a resilient consumer is reinforced by key economic indicators; June retail sales rebounded, suggesting a limited impact from tariffs to date, while initial jobless claims fell to a three-month low of 221,000. Despite President Trump's public criticism of Fed Chair Jerome Powell, market participants are largely anticipating a rate hold at the next central bank meeting, with trader sentiment showing a nearly 100% expectation for steady rates.

Key Decisions for Investors

• Given the strong momentum driven by robust earnings and positive economic data, investors may consider maintaining exposure to U.S. equities, with a particular focus on sectors demonstrating fundamental strength like AI-related technology and resilient consumer goods.
• Monitor upcoming Big Tech earnings, starting with Netflix (NFLX), as they will serve as a critical barometer for market leadership and could influence broader index performance.
• While the market is currently discounting political risks, it is prudent to watch for any shifts in Federal Reserve rhetoric or renewed trade tariff escalations, as these remain potential sources of volatility.