Wall Street has been showing huge resilience with the return of tariff threats. The Nasdaq Composite Index once again made a new record close, driven by the AI boom and confidence in corporate earnings. Growth investing has been outperforming, with many ETFs notching new record highs in the latest trading session.
Some of these include Vanguard Mega Cap Growth ETF MGK, Vanguard Growth ETF VUG, iShares Russell Top 200 Growth ETF IWY, iShares Core S&P U.S. Growth ETF (IUSG), Schwab U.S. Large-Cap Growth ETF SCHG, Vanguard S&P 500 Growth ETF VOOG and SPDR Portfolio S&P 500 Growth ETF SPYG.
These funds have a top Zacks Rank #1 (Strong Buy), suggesting their outperformance to continue.
Investors are hoping for resilience in corporate profits as the earnings season kicks off with major U.S. banks set to report results beginning today. Per the Earnings Trend report, total S&P 500 earnings are expected to grow 4.7% from the year-ago period on 4.7% revenue growth. However, this will be a material deceleration from the growth trend of recent quarters and will be the lowest earnings growth pace since Q3 2023 (read: 5 Sector ETFs Set to Power Q2 Earnings Growth).
The AI boom will continue to fuel the rally, with companies investing huge sums in the technology sector and beyond. The expansion of AI applications holds the promise of ushering in fresh growth opportunities. Tech companies have poured billions into data centers and AI chips to support the growth of AI models. Amid the AI boom, NVIDIA (NVDA) became the first company to reach a $4 trillion market cap, driving a sharp rally in the technology sector.
Trump reignited global trade tensions by threatening new tariff rates, ranging from 25% to 40% on more than a dozen countries starting Aug. 1. The United States will impose 25% tariffs on goods from South Korea and Japan, and a 30% tariff on goods from the European Union and Mexico from Aug. 1. Trump also announced sweeping tariff measures, including a 35% levy on Canadian imports and proposed universal tariffs of 15%–20% on most major trading partners. He confirmed 50% duties on Brazilian goods and copper shipments.
Trump also warned that BRICS countries could face an additional 10% tariff, accusing the group of attempting to harm the United States and weaken the U.S. dollar. The President also escalated tensions with Russia, announcing potential “secondary” tariffs of up to 100% in response to the war in Ukraine, alongside a pledge to supply weapons to Ukrainian forces.
Though the escalation adds to fears that global trade tensions could resurface and strain the broader economy, markets now view Trump’s tariff threats as negotiating tactics rather than guaranteed policy moves.