On July 30, 2026, US three major indices all closed higher, with the S&P 500 index rising 0.6% to 6880 points, the Nasdaq Composite Index rising 0.9%, and the Dow Jones Industrial Average rising 0.3%. This marks the third time in the month that the S&P 500 has refreshed its historical closing high, and the 21st time in 2026. Market sentiment has clearly improved, with the VIX fear index falling to 14.2, a low for the year, as funds accelerate back into stocks.
Earnings Season as the Biggest Catalyst: Tech Giants Impressive Performance
The core driving force behind this rally is the strong performance of the second quarter earnings season. As of July 30, more than 55% of S&P 500 components have reported earnings, with 82% of companies beating market expectations, with an average beat of 6.3%. The Tech Seven (Apple, Microsoft, Google, Amazon, NVIDIA, Meta, Tesla) overall profit grew by 24%, far exceeding other sectors. Among them, NVIDIA's data center business revenue grew 65% year-over-year, again raising its full-year guidance; Google Cloud business achieved profitability for the first time in a single quarter; iPhone shipments also exceeded market concerns.
Wells Fargo senior analyst Peter Ryan said: "The profitability of tech giants has not slowed due to high interest rates; instead, they have achieved accelerated growth through AI monetization and cost optimization. This confirms the pricing power and innovation barriers of US leading companies, which is the foundation for attracting global capital." Supported by earnings data, the tech sector has risen 8.2% in the past month, with the Nasdaq up 4.5% in July, and the Nasdaq 100 index, which measures tech stock weight, broke through the 21,000-point mark on July 28.
Economic Data Exceeds Expectations: Soft Landing Expectations Rise
In addition to earnings, the stabilization of macroeconomic data has also supported US stocks. Data released by the US Department of Commerce on July 31 showed that the July consumer confidence index rose from 106.8 to 109.4, a six-month high; the June personal consumption expenditure (PCE) price index rose 2.3% year-over-year, the lowest since March 2024, further easing inflationary pressures. At the same time, the second quarter GDP annualized growth rate was revised up to 2.9%, higher than the initial 2.6%, showing economic resilience exceeded expectations.
"The inflation that the Fed cares most about is approaching the 2% target, while the job market remains healthy, this combination provides more possibilities for a 'soft landing'." LPL Financial chief economist Jeffrey Roach pointed out. The CME FedWatch tool shows that market expectations for a September rate cut have risen to 78%, a significant increase from a month ago. The decline in interest rate expectations has reduced discount rate pressure, which is particularly beneficial for long-duration growth stocks and has boosted the overall valuation space for US stocks.
Capital Flows: Global Funds Concentrating on US Stocks
The strong performance of US stocks has also attracted continuous inflows of international capital. According to EPFR Global, as of the week ending July 28, global equity funds had net inflows of $12 billion, of which US stock funds had net inflows of $8.9 billion, maintaining positive inflows for nine consecutive weeks. The mild decline in the US dollar index (down 1.8% in July) has reduced exchange losses for non-US investors, further enhancing the attractiveness of US stocks.
In the US, individual investor sentiment has also clearly turned bullish. AAII sentiment surveys show that the bullish ratio rose from 44.7% at the beginning of July to 51.2%, the highest since December 2024; the bearish ratio fell to 28.5%. Margin debt continued to increase, with retail and institutional investors adding positions simultaneously, forming a positive feedback loop.
Long-term Investment Logic: Profitability and Innovation are Key
While short-term gains are exciting, understanding the long-term value of US stocks is more critical for rational investors. Looking back over the past 20 years, the S&P 500 index has an annualized return of about 10.4%, of which about 7 percentage points come from profit growth, with valuation changes contributing about 3 percentage points. This shows that profit growth is the cornerstone of long-term returns for US stocks. In 2026, the expected profit growth rate for the S&P 500 is 9.8%, and is expected to be 11.2% in 2027, with technology, healthcare, and discretionary consumption being the main engines.
Technological innovation is the key supporting the sustained profit growth of US stocks. AI large models have entered the stage of large-scale commercialization, the restart of the cloud computing capital expenditure cycle, and breakthroughs in gene therapy in the biotechnology field have all opened up new growth space for related companies. R&D investment as a percentage of revenue in the S&P 500 has risen to 12.5%, the highest among major global markets. This innovation density is a difficult-to-replicate moat.
Who are US stocks suitable for?
- Long-term investors: Willing to hold for more than 10 years, sharing the compound growth of corporate profits.
- Global asset allocators: Hope to diversify single-market risks, US stocks provide high-quality leaders in dozens of industries.
- Growth-oriented investors: The Nasdaq market gathers frontier technology companies in AI, cloud computing, new energy, etc.
Risk Warning: Valuations are not cheap, but not yet in bubble territory
Of course, we must also face risks. Currently, the S&P 500's static P/E ratio is about 23.8 times, at the 86th percentile of history, higher than the 15-year average of 17.9 times; the Nasdaq 100 P/E ratio is as high as 31.2 times. However, looking at the difference between the earnings yield and the 10-year Treasury yield, stocks still have a premium of about 3.1 percentage points relative to bonds, higher than the historical average, indicating that it has not reached the extreme bubble area.
In addition, Fed policy paths, geopolitical conflicts, and policy volatility before the 2026 midterm elections may bring short-term shocks. Investors should adopt strategies of phased position building and industry diversification to avoid going all-in at emotional highs.
Overall, the new highs of US stocks in July 2026 are not without source, but the result of the combined push of corporate profits, macro resilience, and global capital. For investors who认同 the long-term logic of US stocks, short-term corrections are actually opportunities to re-examine and add positions to high-quality assets. In the new productivity cycle driven by the AI revolution, the long-term allocation value of US stocks remains significant, but rational expectations and disciplined operations are necessary.
