Summer Sizzle: Stocks Stay Hot, Earnings Heat Up
On the latest edition of Market Week in Review, Global Chief Investment Strategist Paul Eitelman recapped the stock market’s latest record-setting run. He also dug into the health of the global economy and the latest inflation numbers from the United States.
Bringing the Heat
Eitelman opened by noting markets turned in another strong performance this week, with several key stock market indexes touching new record highs. These included the S&P 500, the Nasdaq, Australia’s ASX 200 and Japan’s Nikkei 225.
A key reason for this is the ongoing strength in corporate fundamentals, Eitelman said. He explained this is particularly the case in the U.S., where second-quarter earnings growth is projected to top 10% on an annual basis.
“This earnings season has simply been lights out, with a majority of companies handily beating expectations and management guidance for the third quarter coming in positive. In addition, earnings forecasts for 2026 continue to be revised higher,” Eitelman stated.
Warming Up
Other indicators of the global economy also look solid, Eitelman said. For instance, in the U.S., the latest survey from the National Federation of Independent Business showed a rise in small-business optimism during July. Meanwhile, layoffs remain at low levels. “We even saw a modest decline in initial jobless claims this week,” he noted.
Eitelman said that in the UK, second-quarter economic growth topped expectations, rising at a 0.3% clip. “This expansion was powered by a rise in services sector activity and construction,” he remarked. Going forward, Eitelman expects slow, but positive growth, in the UK and eurozone into 2026.
The latest numbers from Australia also point to economic resilience, Eitelman said, noting the country added 25,000 jobs during July while the unemployment rate ticked down to 4.2%.
Pressure Building
Eitelman wrapped up with a look at the latest U.S. inflation numbers, which he said show price pressures are on the rise.
“Data from the latest consumer and producer price indexes suggests core PCE inflation—the Fed’s preferred inflation gauge—likely accelerated to around 2.9% in July,” Eitelman explained. While these numbers led to some volatility in U.S. Treasury yields, he still expects the Fed to cut interest rates at next month’s meeting.
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