Even as Ukraine aid stalls and EU unity frays, Wall Street is charging ahead—at least on the surface. This earnings season has been one of the best in years: nearly 84% of S&P 500 companies are beating profit expectations, and 79% are topping revenue forecasts. EPS revisions have surged, margins are expanding beyond big tech, and nearly two-thirds of firms are beating by more than a standard deviation. On paper, corporate America is in top shape.
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Tech is still leading the charge, with Google’s AI spending spree powering the "gold rush for compute," but there’s a growing sense that markets are ready to differentiate between good AI capex and hype-driven burn rates. Microsoft, Meta, Amazon, and Apple all report next week—if they miss, sentiment could sour quickly.
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Meanwhile, the risk-on mania is back. Speculation has roared back to 2021 levels. Call options dominated July volumes, sub-$1 stocks are exploding, and speculative baskets built around meme stocks and AI-adjacent themes are hitting fresh highs. Yet market breadth is weak, hedge funds are net sellers, and momentum has broken down globally. The same kind of pattern preceded major reversals in 2020 and 2022.
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There’s still a fundamental bid—buybacks are up, capex is rising, and revenue per employee just hit a record. But real consumption has flatlined for six months, industrials are rallying more on hope than data, and a tariff shock from Trump’s pending EU decision could rattle both earnings and inflation expectations.
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As one Goldman strategist put it, next week is a “show-me” moment. Big tech, the Fed, and tariffs all collide—and with positioning stretched and volatility cheap, any disappointment could flip the market from melt-up to meltdown.

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