S&P 500 hits all-time highs on earnings beat, geopolitics easing

The S&P 500 and Nasdaq both reached all-time highs on Monday, driven by a wave of better-than-expected quarterly earnings and renewed optimism around US-China trade relations ahead of Trump's Beijing summit. Wall Street veteran Ed Yardeni flagged confidence that the S&P 500 could breach 8,000 by the end of 2026, a reflection of underlying bullish sentiment despite lingering geopolitical headwinds. Hyperscale data center companies and AI chipmakers posted strong results, fueling the advance in mega-cap tech and infrastructure names.

China's investors have bet heavily that the Trump-Xi meeting will deliver just enough trade detente to sustain the current rally in Chinese equities and support the yuan. Global central banks have also tapped Chinese yuan swap lines at a two-year high in Q1, signaling renewed interest in the currency. This suggests market players see the upcoming summit as a pivot point: a successful meeting could ease trade tensions and unlock fresh capital flows into China and emerging markets. Conversely, a breakdown could spark a sharp reversal in risk-on positioning.

The earnings backdrop remains constructive, though strategists note that tech earnings are driving the stock market more than geopolitical events, per Fundstrat's Hardika Singh. Hims & Hers Health reported a miss amid rising competition in the weight-loss drug space, while Simon Property Group posted strong Gen Z traffic at its malls, signaling consumer health in discretionary retail. Amazon reported negative free cash flowCash generated after maintenance capex; the actual money the business throws off. in Q1 due to massive capex, but rallied 45% long-term on the view that AI growth justifies the near-term cash burn.

The narrative hinges on a dual bet: that corporate earnings can offset elevated rates and inflationThe rate at which prices rise across an economy., and that geopolitical risks will not escalate further. If Trump and Xi find common ground in Beijing and oil prices stabilize, the momentumThe empirical fact that winners keep winning over the medium term. could carryIncome earned from holding a position over time. the market higher. If the summit disappoints or Middle East tensions reignite, the ath could mark a local top before a pullback to support levels.