Stock Market Tug of War: Earnings vs. Rates

As we wrote earlier this month, earnings have provided a strong foundation for stocks this year. With second quarter earnings growth for the S&P 500 on track to exceed 30% (excluding private investment mark-ups) and analysts continuing to raise estimates, it’s safe to say this season strengthened the fundamental case for equities. So, while geopolitics, election-related risks, and rising interest rates may drive volatility in the coming months, improving and broadening earnings growth is likely to raise the floor for stocks, and the S&P 500’s recent technical breakout to new highs probably raises the ceiling. Here are some of our takeaways from this earnings season and some quick thoughts on the tug of war between stocks and interest rates.