S&P 500 Hits Record Highs on Strong Q2 Earnings

Strong second-quarter earnings from major U.S. corporations have driven stock indexes to new record highs. According to data from FactSet, 86% of reporting S&P 500 companies exceeded analyst estimates, easing concerns that market valuations had become unsustainably stretched despite ongoing inflation and geopolitical volatility.

Growth is heavily concentrated in artificial intelligence and energy. Microsoft and Nvidia saw record gains, with Microsoft experiencing a one-day market value surge of $450 billion. AI demand also boosted sales for Caterpillar via data center infrastructure. In the energy sector, ExxonMobil and Chevron reported surging profits, with ExxonMobil's profits more than doubling from the previous year due to high oil prices linked to the war with Iran.

While Alphabet and Amazon account for 71% of the S&P 500's blended earnings increase since July, other sectors showed strength. The Walt Disney Company reported a 7% revenue increase driven by film performance and theme parks. Disney Chief Executive Josh D'Amaro stated the company is performing significantly better than its competition, even amid macro uncertainty.