S&P 500 Hits New High After 42 Days: Withstanding the "Summer Storm," US Long-Term Return Logic Remains Solid

After nearly two months of violent fluctuations, the US stock market finally achieved a decisive breakthrough. Locally on August 4, 2026, both the S&P 500 index and the Dow Jones Industrial Average closed at new highs: the S&P 500 rose 1.79% to close at 7736.52 points, the Dow rose 1.71% to close at 54085.88 points, the Nasdaq Composite Index surged 2.59% to close at 26584.99 points, and the Russell 2000 small-cap index also simultaneously refreshed its record. For investors who held their positions during the "summer storm" of July, this was undoubtedly a reward for patience.

Notably, this is the 25th time this year that the S&P 500 has hit a new closing high, and also the first since June 2. According to Dow Jones Market Data, this gap of 42 trading days from the previous high is the second longest "window period" for highs this year, after the 53-day gap that ended on April 16. And that April breakthrough coincided with the fastest V-shaped rebound on record. This time, whether the market can replicate that strength has become a hot topic on Wall Street.

Catalyst Resonance: AI Earnings and Geopolitical Easing Drive Together

The direct catalysts for this rebound came from multiple directions: US Treasury Secretary Besant publicly stated that the Iran agreement may be reached "in the next day or two," with the Hormuz Strait expected to reopen, international oil prices fell about 5% to 6%, inflation expectations subsequently declined, and Treasury yields fell 3 to 5 basis points, providing strong support for stock valuations; meanwhile, AI industry earnings exceeded expectations across the board, significantly alleviating market concerns about the sustainability of AI capital expenditures. With multiple positive factors resonating, market sentiment quickly shifted from extreme pessimism to全面追涨.

• Geopolitical easing: Rising expectations for Iran agreement, Hormuz Strait expected to reopen, oil price drop bringing inflation expectations down, Fed September rate hike probability falling from 67.2% to 56.9%;
• Earnings beat expectations: Caterpillar, Palantir and other AI-related companies had impressive results, Amazon's market value returned to $3 trillion, NVIDIA's market value regained $5 trillion, "Mag 7" collectively rose nearly 10% in four trading days;
• Valuation recovery: Goldman Sachs data shows Nasdaq 100 forward P/E is about 10% below its five-year average, making the tech sector attractive after deep corrections.

The semiconductor sector performed particularly strongly, with the Philadelphia Semiconductor Index soaring 6.6% in a single day, achieving its fourth consecutive day of gains—this index had plummeted 20.6% in July. The S&P 500 tech sector rose 4.1% on the day, leading among the 11 major sectors. Technically, the S&P 500 strongly broke through the key resistance level of 7600 points, which LPL Financial's chief technical strategist viewed as a clear bullish signal; the Nasdaq simultaneously recovered its 50-day moving average, with AI-related themes leading across the board, and the sector divergence that had plagued the market also showed significant improvement.

Earnings Season Fundamentals: Profit Beat Ratio Far Exceeds Long-Term Average

This rally is not just a capital game. According to LSEG data, as of last Friday, 304 S&P 500 components have reported Q2 earnings, with 85.2% beating market expectations, far higher than the long-term average of 67.5%, and all major industries achieved profit growth. UBS pointed out in its latest report that the US Q2 earnings season is strong, with both the breadth and magnitude of profit beats exceeding historical averages, and the market may underestimate the persistence of the current profit cycle—the extent of underestimation even exceeds the impact of geopolitical noise like the Hormuz Strait. UBS maintains its forecast of 20% EPS growth for the S&P 500 this year, with upside risks, believing that resilient consumer spending and improvements in cyclical forces should support the spread of gains to areas beyond leading companies.

However, the earnings season was not without "incidents." SpaceX's first earnings report after listing showed a loss per share of $0.09, better than the expected $0.26 loss, but capital expenditures nearly doubled quarter-over-quarter to $15.83 billion, with the stock price giving back over 9% of its intraday gains in after-hours trading; AMD's profit and revenue both beat expectations, with revenue up 50% year-over-year, but its data center business only "met rumor expectations," and the stock similarly rose and then fell. This reminds investors that after significant gains, the market's requirements for "beats" are becoming increasingly stringent.

Long-Term Return Perspective: Compound Logic Behind New Highs

Looking at the medium to long term, the new highs in the US stock market have solid historical foundations. Looking back at the past three years, the S&P 500's annualized returns were 26%, 25%, and 18% respectively, and even after the deep correction in July this year, the year-to-date cumulative gain remains considerable. This "short bear, long bull" characteristic of recovering and repeatedly hitting new highs constitutes the core of the US stock market's long-term return advantage—over the past few decades, the S&P 500's annualized total return has long remained around 10%, significantly outperforming most major global markets, which is also the fundamental reason for global capital's continued allocation to US stocks.

Looking ahead, Goldman Sachs' chief global equity strategist Peter Oppenheimer team predicts the S&P 500 will reach above 7600 points in 2026, corresponding to about 11% annual growth; in the long term, Goldman Sachs expects the S&P 500's annualized return to be 6.5% over the next decade, down from the previous forecast of 7.7% but still above the global average. JPMorgan is more optimistic, believing the S&P 500 still has about 22% upside. Goldman Sachs' trading desk analysis points out that the current market has four supports: cleaner positions (large-scale deleveraging completed), improved technicals (momentum factor rebound, leverage ETF exposure contraction), reasonable valuations, and improved fundamental visibility.

After New Highs: Beware of FOMO and Insufficient Volume

Of course, the market's optimistic sentiment is not without concerns. This rebound shows the typical "spot rises, volatility also rises" feature. According to Goldman Sachs data, this is the largest short covering rally since Thanksgiving, with 0DTE option traders大量买入跨式组合 betting on further volatility increases, with market sentiment switching from "run quickly" to "chase全面" in just a few days. In terms of trading volume, Tuesday's total turnover was 7% lower than the 5-day average, with trading activity only at 4 out of 10 (full score), indicating this rally is not a comprehensive volume breakthrough, and the sustainability of chasing gains remains questionable.

Many industry insiders have also expressed caution. Cresset Capital's chief investment strategist Jack Ablin bluntly stated: "From oil to rates to stocks, I feel no doubt among investors... I'm not sure a few earnings reports are enough to support the S&P 500 hitting new highs." CIBC's senior energy trader reminded that the oil price drop is more based on "traffic recovery prospects" rather than the details of an agreement, with upward momentum lacking sustainability and downward movements often more rapid. Additionally, Qatar noted that there is no formal agreement yet, and geopolitical risks have not been completely eliminated.

Conclusion: Patience is the Core Asset for Long-Term US Stock Investors

In summary, this record-breaking rally in the US stock market is the result of the resonance of profit fundamentals, liquidity environment, and geopolitical risk easing. For investors focused on the US market trend, new highs themselves do not constitute a reason to chase gains, but they once again confirm a simple rule: the long-term return advantage of US stocks is built on cycle after cycle of "climbing in worry." Whether the market can maintain highs after FOMO sentiment fades will still depend on trade negotiation progress, oil price trends, and whether AI investment returns can continue to be fulfilled. Maintaining position discipline and focusing on profit certainty may be more important than predicting price levels themselves—in the world's largest capital market, time will ultimately reward those long-termists who maintain patience during storms.