The market considered NVIDIA's results satisfactory and did not move into a correction. On the contrary, the upward revision of US GDP for the second quarter from 3% to 3.3% inspired equity bulls to aim for new highs. The S&P 500 crossed the 6,500 mark for the first time in history, setting a fresh record peak. When a broad stock index is backed not only by artificial intelligence technologies but also by a strong economy, why should it not rise?

US GDP dynamics

It is noteworthy that the GDP growth revision was based on business investment, not net exports. This gave investors more confidence in the resilience of the US economy to the White House's protectionist policies. At the same time, the market strengthened its belief that most of the tariff drama earlier this year was misplaced. Meanwhile, the expected September cut in the federal funds rate is already priced into the S&P 500. That is why it is critical that inflation does not accelerate.

Bloomberg experts expect the core personal consumption expenditures index to accelerate from 2.8% to 2.9% in July. If this happens, the equity market will have a chance to extend its rally. If not, a new barrier will emerge.

US inflation dynamics

Derivatives show an 85% probability of the Fed resuming its monetary easing cycle at the next FOMC meeting. A bigger question for investors is what comes next. According to Christopher Waller, keeping the federal funds rate at 4.5% in July was a mistake. The central bank cannot afford to wait until the labor market freezes. This process could unfold very quickly.

At the same time, the leading candidate to become the central bank's next chair after Jerome Powell steps down in May 2026 does not support Treasury Secretary Scott Bessent's proposal for a 50 basis point rate cut in September. He believes that 25 basis points would be sufficient.

Thus, artificial intelligence technologies, strong corporate earnings, including NVIDIA's solid results, a still resilient US economy, and the Fed's readiness to ease monetary policy create the perfect backdrop for the continuation of the S&P 500's uptrend.

The only real challenge for equity bulls could be capital outflows from North America to Europe, given EuroStoxx 600's fastest outperformance over its US counterpart in nearly two decades. However, the gap, currently at 13 percentage points in dollar terms, is unlikely to widen much further. The US economy is not as fearful of tariffs as it was after America's Liberation Day in April.

Technically, on the daily chart, the S&P 500 has made another step toward the previously outlined long targets of 6,565 and 6,700. The strategy remains unchanged: buy the broad equity index on pullbacks or when new local highs are hit.