Tech earnings drive S&P 500 to all-time highs amid valuation pressure

US equities posted another record-setting day, with the S&P 500 touching all-time highs and the Nasdaq Composite near recovery as technology earnings deliver outsized returns. Analysts including Ed Yardeni have raised year-end 2026 targets, with some projecting the S&P 500 could breach 8,000 points. The rally has been underpinned by tech-heavy names reporting better-than-expected results and raising AI-related capex guidanceCompany-issued forecasts of future financial performance., which has offset broader economic concerns.

However, the macro backdrop remains contentious. Consumer confidence is sagging, gasoline prices sit at 4.54 dollars per gallon, and the upcoming CPI data on Tuesday will test whether inflationThe rate at which prices rise across an economy. pressures persist despite some commodity supply relief. Jollibee Foods reported a 39 percent profit decline in the first quarter as costs surged, forcing the Philippines' largest fast-food chain to review spending and guidanceCompany-issued forecasts of future financial performance.. United Parks and Resorts posted a wider-than-expected quarterly loss on attendance slips driven by fewer international visitors and unfavorable geopolitics. Simon Property Group CEO noted strong Gen Z foot traffic, but the breadth of retail strength outside of high-growth names remains unclear.

The divergence is particularly stark in fixed income. Bond yields have risen as traders reassess the Fed's rate-cut timeline; Goldman Sachs and Bank of America have both delayed their first Fed rate-cut calls following "last straw" jobs data. Japan's 10-year bond auction saw stronger-than-average demand as yields rose, signaling a broad repricing of global rate expectations. Private credit fund Carlyle BDC cut its dividend despite flagging an improving credit environment, suggesting underlying stress in leveraged lending.

The debate hinges on whether strong tech earnings can sustain valuations amid deteriorating consumer health and sticky inflationThe rate at which prices rise across an economy.. Bulls argue that AI capex spending will drive earnings growth for years and justify current multiples; bears contend that equity prices have decoupled from the weak macro reality and that a correction is overdue once earnings growth slows.