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RegExp("[?&]notifications=1(&|#|$)");"desktop"===y&&i&&b.test(window.location.search)&&(i.checked=!0)};be("ybar-mod-notification",(function(e){var t={isUH3:"crunch"===e.getConfig().ytheme,notifContainer:document.getElementById("notification-container"),notifBadge:document.getElementById("notif-badge"),notifMenu:document.getElementById("ybarNotificationMenu"),notifMenuOpener:document.querySelector("#ybarNotificationMenu + label"),notifDropdown:document.getElementById("notifDropdownContainer"),tooltipContainer:document.querySelector(".".concat(Vn)),notifLabel:document.querySelector(".".concat($n))};t.notifDropdown&&ro(e,t)}))}()}};]]>Francisco VelasquezTue, Jul 29, 2025, 6:57 PM 2 min readWall Street’s recent rally could soon face a reckoning."Stocks are up because we've priced out macro risks," Michael Kantrowitz, chief investment strategist at Piper Sandler, said on Yahoo Finance's Opening Bid. "If the earnings aren't good enough, there's a lot of downside risk."Kantrowitz said the absence of fear has powered the bull market instead of a surge in corporate results, and investors are already pricing in a soft landing before it's fully earned.The S&P 500 (^GSPC) has climbed over 8% in the past year, buoyed by falling inflation, rate-cut hopes, and fading recession fears. Kantrowitz, however, said there haven't necessarily been signals of stronger fundamentals. The disconnect may worsen if companies report middling results or offer guidance that names headwinds, such as tariffs.Tariffs appear to be gnawing at Procter & Gamble (PG) and Whirlpool (WHR). Both companies recently reported earnings that underscored the repercussions they face due to Trump's trade policy.Kantrowitz argued that companies experience international supply chain pressures differently. While some high-flying names have seen effortless growth, he advises against using the market as an indicator of whether risks like tariffs are being priced in."The market may not be appearing to pay much respect to tariff risks," he said, even though negative surprises can arise from Trump's tariff deals.The path higher has been greased by unusually favorable financial conditions. Bond volatility is sitting at multiyear lows. Real energy prices remain tame. Credit spreads, a key gauge of corporate risk, have tightened to multidecade lows, Kantrowitz added.These factors may help explain why valuations are stretched and why they make the current moment more fragile, especially if interest rate expectations shift."Valuations of the S&P 500 should be high relative to history," Kantrowitz said, noting that credit spread suggests that further P/E expansion is limited."How much more PE expansion is possible? That's going to come down to the next several inflation reports and where interest rates go."The risks are that the market is currently pricing in too many rate cuts, and that sticky inflation or geopolitical shocks, like trade wars, force a repricing. If that happens, investors may "sell off" the most speculative names.In the near term, attention will remain on corporate guidance. Any sign of softening demand, margin pressure, or cost inflation could cause swift revaluations. But over the longer term, the market's fate may hinge on whether earnings actually catch up to the optimism or if Wall Street will be forced to reckon with results that don't support the hype.Terms and Privacy PolicyPrivacy & Cookie SettingsMore InfoS&P 5006,385.19 -4.58 (-0.07%)Dow 3044,732.55 -105.01 (-0.23%)Nasdaq21,161.74 -16.85 (-0.08%)Russell 20002,244.17 -12.56 (-0.56%)VIX15.22 +0.19 (+1.27%)Gold3,321.90 +11.90 (+0.36%)PortfolioSign in to access your portfolioSign inTop gainersNEGG Newegg Commerce, Inc. 48.74 +9.66 (+24.71%)SANM Sanmina Corporation 119.28 +20.93 (+21.31%)CVLT Commvault Systems, Inc. 193.49 +30.06 (+18.39%)AMKR Amkor Technology, Inc. 25.05 +3.82 (+18.00%)CLS Celestica Inc. 201.68 +28.31 (+16.33%)Top losersNVO Novo Nordisk A/S 54.39 -14.61 (-21.17%)STEM Stem, Inc. 15.27 -3.64 (-19.20%)EXEL Exelixis, Inc. 37.17 -7.22 (-16.27%)HRI Herc Holdings Inc. 125.28 -24.61 (-16.42%)QS QuantumScape Corporation 9.43 -1.55 (-14.16%)Most activeSOFI SoFi Technologies, Inc. 23.98 +2.95 (+14.06%)NVDA NVIDIA Corporation 176.45 -0.30 (-0.17%)NVO Novo Nordisk A/S 54.39 -14.61 (-21.17%)LCID Lucid Group, Inc. 2.5780 -0.2120 (-7.60%)AMD Advanced Micro Devices, Inc. 178.63 +4.97 (+2.86%)Earnings eventsTrending tickersNVO Novo Nordisk A/S 54.61 -14.39 (-20.86%)SOFI SoFi Technologies, Inc. 23.91 +2.89 (+13.73%)PYPL PayPal Holdings, Inc. 71.59 -6.64 (-8.48%)UNH UnitedHealth Group Incorporated 268.40 -13.72 (-4.86%)SPOT Spotify Technology S.A. 627.26 -73.72 (-10.52%)Top economic events