May 14, 2025: Strong Tech Earnings Anchor Investor Optimism

This week, U.S. large-cap investors are breathing a collective sigh of relief as the S&P 500 has recovered its post-Liberation Day losses and now sits nearly flat for the year. Driving this rebound is a 90-day détente in the U.S.-China trade war, which temporarily lifts steep tariffs that had threatened to disrupt trade between the world’s two largest economies.

Overlooked amid the geopolitical news, however, is another key factor boosting market sentiment: a surprisingly strong first quarter of corporate earnings, led once again by the nation’s largest technology companies.

Heading into earnings season, analysts expected year-over-year earnings growth of about 7% for S&P 600 companies—a solid but unremarkable projection. With 454 companies now having reported, actual growth is tracking closer to 13%. This upside surprise is largely due to standout results from megacap tech leaders Microsoft and Meta. Both companies delivered double-digit revenue and earnings growth, while reaffirming major investments in AI infrastructure—moves that also lifted sentiment for the broader tech sector.

With more than 30% of its weight concentrated in technology, the S&P 500 has become increasingly reliant on a handful of dominant tech names. For now, the strong performance of Microsoft, Meta, and their peers continues to support the index—and investor confidence.

Weekly Market Update: May 14, 2025