Market Brief: Wall Street Sees Strong Earnings Keeping Stocks Moving Higher

Wall Street Sees Strong Earnings Keeping Stocks Moving Higher Wall Street strategists expect the S&P 500 to finish 2026 around 7,900, according to a Reuters poll, supported by surprisingly strong corporate profits. Second-quarter earnings are on track to rise 33.5% from a year earlier, the strongest growth since 2021, as AI investment and resilient economic activity bolster results. Strategists remain cautious, however, about elevated valuations, geopolitical risks and the possibility of a near-term pullback. Why It Matters: The bullish case for stocks is increasingly resting on earnings rather than multiple expansion. Continued profit growth could help justify elevated valuations, but it also raises the stakes if corporate results begin falling short of expectations. Source: Reuters The $7 Trillion AI Buildout Is Creating a Financing Problem Technology companies could pour roughly $7 trillion into AI infrastructure by 2030, but financing the data centers needed to support that expansion is creating new risks. Developers are increasingly relying on debt, leases and other financing structures to fund facilities whose economics ultimately depend on sustained demand for computing power. Rising borrowing costs and the rapid pace of technological change make those long-lived commitments particularly significant. Why It Matters: AI is increasingly a credit story as well as an equity story. If demand disappoints, the enormous financing commitments behind data centers could create problems for technology companies, lenders and investors exposed to the infrastructure boom. Source: Financial Times Anthropic Tells Investors Its Potential Market Could Top $30 Trillion Anthropic is expected to tell investors that its potential revenue opportunity could eventually exceed $30 trillion as the Claude developer positions itself for continued rapid growth. The enormous estimate underscores how aggressively leading AI companies are framing the long-term opportunity ahead of potential public listings. It also arrives as investors increasingly question whether the trillions being committed to AI infrastructure can generate sufficient returns. Why It Matters: Private AI valuations increasingly depend on extraordinary long-term growth assumptions. Anthropic’s projections could help establish the expectations investors use to value the next generation of AI companies when they eventually reach public markets. Source: The Wall Street Journal ALTERNATIVES SEC Scrutinizes Banks’ Dealings With a High-Profile AI Hedge Fund The SEC has subpoenaed major Wall Street banks for information related to trading by Situational Awareness, the hedge fund that suffered heavy losses during July’s AI-stock rout. The fund was forced to liquidate positions amid margin calls, with Citadel ultimately buying much of its public-equity portfolio. The regulatory inquiry does not necessarily mean the fund or the banks are accused of wrongdoing. Why It Matters: The inquiry highlights the risks created when highly leveraged hedge funds encounter abrupt market reversals. Regulators’ focus on bank counterparties could also increase scrutiny of how Wall Street finances concentrated alternative-investment strategies. Source: Fortune CRYPTOCURRENCY Bitcoin ETF Inflows Suggest the Rally Is Finding Real Buyers U.S. spot bitcoin ETFs have attracted more than $2.5 billion during a six-day inflow streak, providing evidence that institutional demand is supporting bitcoin’s rebound rather than forced short covering alone. ETF assets climbed to roughly $98.6 billion from $78.7 billion a week earlier. Meanwhile, the supplies of Tether’s USDT and Circle’s USDC expanded by a combined $4 billion over the past week, signaling fresh liquidity entering crypto markets. Why It Matters: Persistent ETF and stablecoin inflows could make bitcoin’s recovery more durable. Unlike a short squeeze, sustained spot buying represents fresh capital entering the asset class and provides a clearer gauge of institutional demand.