empty
11.07.2025 10:50 AM
Market fears nothing

The S&P 500 reached another all-time high, with rotation being the hallmark of the US equity market. Investors are aggressively buying up stocks that underperformed in the first half of the year. Conversely, previous growth leaders are now lagging. For instance, energy companies — a notably weak sector from January through June — surged ahead in July. On the other hand, communication services, the second-best performer earlier, turned into the worst.

S&P 500 sector leaders and laggards

This image is no longer relevant

The core issue lies in the overvaluation of yesterday's winners. The price-to-earnings ratio for industrials, which led the first half, is now near the top of its 20-year range. In July, that sector ceded the spotlight to energy and materials.

Put simply, investors are not just buying S&P 500 dips. They are picking up anything that has not yet rallied. Coupled with successful auctions of 10- and 30-year Treasuries, this opens the door for a potential comeback in American exceptionalism. As a result, the US dollar is not faring as badly as it did in the first half of the year.

Investors are entering the second-quarter earnings season with optimism. According to FactSet, S&P 500 earnings are expected to grow 4.8%, marking the slowest pace since late 2023. However, lower estimates give companies a favorable opportunity to beat expectations. When actuals exceed forecasts, assets tend to rise. And the broad equity index is no exception.

S&P 500 earnings and sales forecasts

This image is no longer relevant

Despite its strength, pessimists have not disappeared. JP Morgan warns that investors are overly complacent about tariffs. The Sevens Report notes that the delay in tariff hikes until August 1 effectively kills off hopes for a July Fed rate cut. As tariff effects seep into the economy, the likelihood of monetary easing in September will also decline. This could weigh on the S&P 500.

This image is no longer relevant

Alongside rotation, another defining feature of the US equity market at midyear is the absence of fear. The imposition of 50% tariffs on copper and Brazil, the increase in duties on Canadian goods from 25% to 35% — none of this rattles the S&P 500. Investors strongly believe that such extreme scenarios will not materialize. Donald Trump will compromise. His bark is worse than his bite. As a result, S&P 500 dips are seen as buying opportunities.

Technically, the daily S&P 500 chart shows an ongoing uptrend. The index has come close to the first of two previously outlined targets at 6,325 and 6,450. As long as the broad equity index trades above its fair value at 6,225, bulls have nothing to fear. We recommend holding previously opened long positions.

Marek Petkovich,
Analytical expert of InstaForex
© 2007-2025
Summary
Urgency
Analytic
Igor Kovalyov
Start trade
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

USD/JPY – Analysis and Forecast

The Japanese yen halted its intraday decline after Prime Minister Shigeru Ishiba downplayed the significance of recent media reports suggesting his resignation. News from Japan and the United States continues

Irina Yanina 13:23 2025-07-23 UTC+2

XAU/USD – Price Analysis and Forecast

News from the United States and Japan is significantly impacting the price dynamics of the precious metal. President Donald Trump announced the conclusion of a major trade deal with Japan

Irina Yanina 13:18 2025-07-23 UTC+2

AUD/JPY. Analysis and Forecast

On Wednesday during the Asian session, the AUD/JPY pair posted solid gains, extending a moderate rebound from the two-week low recorded the day before. However, spot prices have slightly pulled

Irina Yanina 11:53 2025-07-23 UTC+2

U.S.-Japan Deal Eases Market Tensions (Possible Decline in Ethereum and Litecoin)

An unexpected announcement from Donald Trump that the U.S. has struck a "major deal" with Japan gave investors a sense of relief, fueling demand for company stocks and reducing overall

Pati Gani 10:22 2025-07-23 UTC+2

The Market Faces a Cold Shower

If something seems too good to be true, it probably is. The S&P 500 remains stuck in indecision near its all-time high, showing little reaction to positive developments. Neither

Marek Petkovich 09:01 2025-07-23 UTC+2

What to Pay Attention to on July 23? A Breakdown of Fundamental Events for Beginners

No significant macroeconomic reports are scheduled for Wednesday. The event calendars for the Eurozone, Germany, and the United Kingdom are empty, while in the United States, a report

Paolo Greco 06:51 2025-07-23 UTC+2

GBP/USD Overview – July 23: The Powell–Trump Showdown: A Matter of Principle and Honor

On Tuesday, the GBP/USD currency pair maintained its upward bias, although it failed to post significant gains throughout the day. However, this is not an issue. The U.S. dollar

Paolo Greco 03:33 2025-07-23 UTC+2

EUR/USD Overview – July 23: Donald Trump Keeps Promising and Pressuring the EU

On Tuesday, the EUR/USD currency pair maintained the beginning of a new leg of its upward trend. A day earlier, the price had consolidated above the moving average line, which

Paolo Greco 03:33 2025-07-23 UTC+2

The EU Prepares an "Anti-Coercion Package"

As I mentioned in the previous review, the European Union has tools to respond to Donald Trump. European officials' reluctance to enter into a full-scale conflict is understandable. First

Chin Zhao 00:53 2025-07-23 UTC+2

Trump Is Squeezing the EU Dry

When Donald Trump comes to power, you can't help but feel glad you don't live in the United States of America. Of course, that's a joke—but as with any joke

Chin Zhao 00:53 2025-07-23 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.