S&P 500 Rises Near Record Ahead of Fed and Big Tech Reports

U.S. stocks moved slightly higher on Wednesday as investors entered a pivotal period filled with economic reports, earnings updates, and a much-anticipated interest-rate decision from the Federal Reserve. The S&P 500 index edged up 0.1% in early trading, hovering near record highs, while the Nasdaq 100, dominated by technology stocks, gained 0.2%. Despite the market’s strong rally since April’s lows, many analysts caution that momentum may be due for a pause.

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David Kelly, chief global strategist at JPMorgan Asset Management, expressed concern about the rally’s sustainability, noting that “the higher the market gets, the more vulnerable it becomes.”

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Fresh data showed that U.S. economic activity rebounded strongly in the second quarter, helping to ease fears that trade tensions under the Trump administration were stalling growth. Inflation-adjusted gross domestic product rose at a 3% annualized pace, reversing a 0.5% contraction in the previous quarter, according to preliminary government figures released Wednesday.

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The Federal Reserve is widely expected to keep interest rates unchanged for a fifth consecutive meeting later in the day. However, markets will closely watch Fed Chair Jerome Powell’s comments for clues about future policy direction and pay attention to how many Fed officials dissent during the decision.

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After the market closes, all eyes will be on major tech earnings from Microsoft Corp. and Meta Platforms Inc., which could be pivotal in determining whether the S&P 500 can maintain its recent upward trajectory. Analysts forecast 18.2% earnings growth for the tech sector over the next year—an ambitious target that has only been exceeded three times since 2011, according to Bloomberg Intelligence strategists Gina Martin Adams and Michael Casper.

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In total, 52 companies in the S&P 500 are scheduled to report results on Wednesday alone, spanning both pre-market and post-market announcements. Nearly 40% of the index has already released earnings, giving investors early insights into corporate performance.

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On the trade front, President Donald Trump faces a key decision on whether to extend the current tariff truce with China before it expires in two weeks. Extending the truce would signal ongoing progress in stabilizing relations between the world’s two largest economies, an issue closely monitored by markets.

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Market strategists at Barclays, led by Emmanuel Cau, note that the recent stock rally has been driven primarily by retail investors, while institutional participation has been more measured. Retail trading activity has reached historically high levels. Barclays suggests that unless a major growth shock occurs, current investor positioning could continue to support stock gains through the second half of the year.

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Looking ahead, seasonal trends indicate potential challenges for the S&P 500. Historically, August and September have been the index’s weakest months over the past 30 years, with average declines of 0.7% in each month. By contrast, the benchmark has averaged a 1.1% gain during other months. Analysts attribute this pattern to portfolio adjustments by money managers during this period, which often lead to increased market volatility.

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Several U.S. firms posted earnings late Tuesday, adding more context to the corporate earnings landscape. Starbucks Corp. reported stronger-than-expected net revenue for its third quarter, exceeding analyst forecasts. Visa Inc., meanwhile, reaffirmed its profit guidance for the remainder of the fiscal year, signaling stable financial performance.

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In other market moves, shares of Peloton Interactive Inc. rose on Wednesday after UBS Group AG analysts upgraded the fitness company from neutral to buy. The analysts cited improving fundamentals supported by stronger revenue growth and additional cost-cutting measures, boosting investor confidence in Peloton’s turnaround efforts.

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As this eventful week unfolds, investors face a convergence of factors—including Fed policy decisions, trade negotiations, tech earnings, and seasonal market trends—that could dictate the market’s direction heading into late summer. While strong economic data and robust corporate results have buoyed sentiment, analysts remain cautious about potential vulnerabilities in the ongoing rally.

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