Alex Ridgers, StoneX Global Head of Retail Dealing, examines what’s driving US equities and where risks may be emerging.
Ridgers notes that while the S&P 500 has reached record levels, the rally is being led by a very small segment of the market. “Since the lows of April, we’ve seen the Magnificent Seven rise 36%, but the rest of the S&P is only up 24%”. He highlights that historically, when fewer than 100 stocks contribute positively during a period of new highs, the following 12 months tend to underperform.
The upcoming earnings releases could widen the gap further, particularly if AI-related stocks continue to outperform. Ridgers outlines key reports from healthcare, banking, and tech giants, including Netflix and Tesla. He warns that “good results are already tangled into expectations,” meaning strong earnings may have limited upside effect, while any underperformance could trigger sharper declines.
Tariffs are impacting company performance, as shown by Samsung’s 56% drop in quarterly profits. However, Ridgers notes that Samsung’s share price didn’t drop, signaling that while tariffs are biting, markets are still maintaining a broadly positive view.
The key risk Ridgers flags comes not from companies but from governments. “Investors are demanding higher yields from bonds” due to concerns about overspending and policy direction in the US and UK. He warns of a return to “vigilante investing” and fears that rising yields could trigger a selloff across equity markets if confidence erodes.
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---- Written by Frederic Guetin, StoneX TV Producer
---- Expert: Alex Ridgers, StoneX Global Head of Retail Dealing
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