US stocks extend rally as earnings season unfolds

• The S&P 500 reached record highs in only 11 trading sessions after a 5-10% decline, the fastest such recovery on record according to Bespoke Investment Group.
• Megacap tech stocks led the rally, with the Nasdaq posting 12 consecutive winning sessions—its longest streak since 2009—as companies like Alphabet and Meta outperformed.
• Nearly 20% of S&P 500 companies report earnings this week including Tesla, with first-quarter profits expected to grow approximately 14% year-over-year, while oil at $94 (up from $67 in late February) threatens to push inflation and Treasury yields higher.

Summary

Market Performance:

US stocks have surged to record highs, with the S&P 500 breaking above 7,000 for the first time and closing at its highest level since January 27. The Nasdaq Composite also hit its first all-time high since October 29, achieving 12 consecutive up sessions—its longest winning streak since 2009. After falling 9% from its January peak, the S&P 500 rebounded 11% since March 30, returning to records in just 11 trading sessions—an unprecedented recovery speed according to Bespoke Investment Group.

Key Drivers:

Easing US-Iran geopolitical tensions has fueled the rally. Megacap technology stocks, particularly Alphabet and Meta Platforms, are leading gains after initially declining during the sell-off. Nearly one-fifth of S&P 500 companies report earnings this week, with first-quarter profits expected to rise approximately 14% year-over-year (LSEG IBES estimates).

Companies and Sectors:

Tesla reports earnings this week as the first "Magnificent Seven" company, followed by Boeing, Intel, and Procter & Gamble. Microsoft, Alphabet, and Meta report next week. Technology sector performance has significantly outpaced the broader market.

Risks and Concerns:

Oil prices remain elevated at $94 per barrel (versus $67 in late February), raising inflation concerns. Higher oil costs could pressure Treasury yields and equity valuations. Retail gas prices have reached $4 per gallon, potentially impacting consumer spending when March retail sales data releases.

Forward Outlook:

Markets are not pricing in Fed rate cuts this year due to inflation risks. Kevin Warsh, Trump's Fed nominee, testifies before Congress on Tuesday. Analysts including Deutsche Bank's Jim Reid describe the rally's velocity as "astonishing," while Boston Partners warns sustained high oil prices pose ongoing risks.