- The Nasdaq is on track for a roughly 20% quarterly gain, its strongest since 2020, while the S&P 500 has risen about 14%.
- The rally is driven by tech sector leadership and resilient earnings, despite recent volatility and geopolitical tensions.
- Investors are also watching U.S.-Iran talks in Qatar and the yen's slide near 40-year lows, which could spur intervention.
U.S. stocks are set to close out the quarter on a high note, with futures pointing higher on Friday. The Nasdaq Composite has surged about 20% in the second quarter, marking its best quarterly performance since 2020, while the S&P 500 has gained roughly 14%. The rally underscores a broad risk-on mood as investors bet on resilient corporate earnings and easing fears of aggressive rate hikes.
The tech-heavy Nasdaq has been propelled by strong performances from megacap names, as earnings optimism and artificial intelligence enthusiasm continue to fuel demand. “The market is pricing in a soft landing scenario, with tech leading the charge,” said one portfolio manager. “But we're not out of the woods yet, with geopolitical risks and currency moves adding uncertainty.”
Markets are also keeping a close eye on U.S.-Iran talks being held in Qatar, which could impact energy prices and global risk appetite. Oil prices have remained relatively steady, but any breakthrough or collapse in negotiations could trigger volatility. Meanwhile, the Japanese yen has weakened to near its lowest level against the dollar in 40 years, keeping traders on alert for potential intervention from Japanese authorities.
The combination of strong equity performance and macro headwinds presents a mixed backdrop. “The rally has been impressive, but we're seeing signs of fatigue,” noted a market strategist. “If tech earnings start to disappoint or geopolitical tensions escalate, we could see a sharp pullback.”
Correction: An earlier version of this article misstated the S&P 500’s quarterly gain as 10%. It is approximately 14%.