Broader Participation Anticipated in U.S. Stock Market Rally

The U.S. stock market rally, driven by tech giants like Nvidia, faces scrutiny as investors determine if profit growth from other companies can match the leaders. With major banks' earnings reports approaching, market strategists foresee broader participation by stocks across various sectors, hoping for a soft economic landing.

The U.S. stock market rally, prominently driven by major tech companies such as Nvidia, is about to face a crucial test in the upcoming weeks. Investors are keen to see if profit growth from a broader range of companies can catch up with tech giants.

As the S&P 500 has surged by 16% in 2024, its performance has largely been attributed to a few colossal stocks benefiting from emerging artificial intelligence technology. However, only 24% of the stocks in the index outperformed in the first half of the year, indicating a narrow rally.

Second-quarter earnings season begins next week, with key reports from financial giants like JPMorgan and Citigroup. Investors are hopeful that a wider range of companies will report improved earnings, offsetting the potential fragility of a narrow rally. This optimism is bolstered by expectations of a soft economic landing. Key indicators, including Fed Chair Jerome Powell's testimony and inflation data, will shed light on the market's future trajectory.

(With inputs from agencies.)