Investors Look to Earnings as Fed Holds Back on Guidance

What happened

Investors are weighing concerns over interest rates, inflation, and geopolitics against a robust earnings season. With little guidance from policymakers, markets focus on corporate earnings, particularly those fueled by AI infrastructure spending. The S&P 500 hit a record high on Thursday, and about 85% of reporting S&P 500 companies have beaten estimates. Big Tech AI spending is projected to exceed $700 billion this year.

Why it matters

Investors are looking to earnings to validate bullish assumptions and offset macroeconomic risks, especially as the Jackson Hole symposium (Aug 27-29) approaches for Fed clarity. Strong earnings, particularly from AI-related companies, are seen as the strongest defense against inflation and interest rate risks.