S&P 500 and Nasdaq Reach Record Highs on Strong Earnings

The S&P 500 and Nasdaq Composite reached record highs on May 1 as corporate earnings growth accelerated to 27.8%. It marks the longest weekly winning streak for United States US equities since 2024. Investors are prioritizing high-growth tech results over persistent inflation risks and geopolitical tensions in the Middle East.
Tech Earnings Drive Market Momentum
LSEG IBES data shows first-quarter earnings growth for the S&P 500 is now tracking at 27.8%, up from 16.1% last week. This represents the fastest pace of expansion since the final quarter of 2021. AAPL shares rose 4.8% after the company reported strong demand for its iPhone 17 and MacBook Neo models.
Software providers also saw gains after ATLASSIAN CORP-CL A TEAM increased its annual forecast, sending its stock up 22.6%. SALESFORCE INC CRM added 3.2% and SERVICENOW INC NOW rose 2.3% following the sector-wide momentum. DATADOG INC - CLASS A DDOG and WORKDAY INC-CLASS A WDAY climbed 6.4% and 3.1% respectively.
Macro Headwinds and Geopolitical Signals
Sentiment improved during the midday after Iran IR state media reported that Tehran sent a negotiation proposal to the U.S. via Pakistan PK mediators on the previous afternoon. However, supply chain pressures remain a factor for manufacturers. Supplier delivery performance worsened in April as conflict in the Strait of Hormuz pushed raw material prices to a four-year high.
Verecan Capital Management portfolio manager Devin Cattelan said high oil prices could cascade into higher manufacturing and transportation costs. Additional pressure came from the White House as President Donald Trump announced plans to increase tariffs on European Union vehicles to 25%. U.S. consumer spending also decelerated in the first quarter as the personal savings rate fell.
Divergent Performance in Digital Platforms
REDDIT INC-CL A shares jumped 12.7% following a revenue forecast that exceeded analyst expectations. In contrast, ROBLOX CORP -CLASS A fell 17.5% after the gaming platform lowered its annual bookings guidance. Despite these outliers, the broader market remains in a record-setting phase.
Historical data from Fidelity shows the S&P 500 has averaged a 2% gain between May and October since 1945. This is lower than the 7% average gain seen from November through April. Market participants are monitoring whether the current earnings strength can offset this historical seasonal weakness.
What to Watch
Investors will monitor the impact of the proposed 25% tariff on European Union vehicles as trade negotiations continue through the coming weeks.
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