The stock market rally continues to push higher, with the SPY trading near record territory as investors respond to a supportive combination of strong corporate earnings, easing Treasury yields and cooler inflation data.
After an impressive run, the question traders are asking now is simple:
Can the rally continue—or is the market becoming vulnerable to a pullback?
Strong Earnings Keep Supporting Stocks
One of the biggest drivers behind the market’s strength has been corporate earnings.
Companies across the S&P 500 have generally delivered better-than-expected results, helping reinforce the idea that corporate America remains in relatively strong shape. Recent reporting shows earnings growth has been especially robust this season, giving investors another reason to remain optimistic.
Strong earnings are important because they can help justify higher stock prices. As long as companies continue producing growing profits and constructive guidance, buyers may be willing to keep supporting the market even at elevated levels.
Cooler Inflation Provides Another Tailwind
Inflation has also moved in a more favorable direction.
July’s annual CPI reading eased to 3.4%, while core inflation moderated as well. That has reduced some of the immediate pressure on the Federal Reserve to tighten monetary policy further.
For stocks, that’s significant.
Lower inflation can reduce pressure on interest rates and Treasury yields, which can make equities—particularly growth and technology stocks—more attractive.
Treasury Yields Remain an Important Piece of the Puzzle
Treasury yields have been one of the biggest variables affecting the market throughout 2026.
Recently, yields have shown signs of easing as economic data softened and investors reassessed the likelihood of additional Federal Reserve rate increases.
If yields continue moving lower, that could provide another tailwind for stocks.
However, traders shouldn’t ignore the bond market. Long-term yields remain relatively elevated, meaning another sharp move higher could quickly become a headwind for the rally.
Can the SPY Rally Continue?
For now, the trend remains strong.
The SPY has been trading near all-time highs, supported by strong earnings, cooling inflation and improving interest-rate expectations.
But markets rarely move higher in a straight line.
After a strong advance, traders should watch for signs of weakening momentum, deteriorating market breadth or renewed pressure from Treasury yields. A normal consolidation or pullback wouldn’t necessarily end the larger bullish trend—but it could create important new levels to watch.
The key question isn’t simply whether the market is at an all-time high.
It’s how the SPY behaves once it gets there.
What We’re Watching Next
In this week’s Market Minute, we take a closer look at the SPY, the strength behind the current rally and the technical levels that could help determine whether stocks have room to push even higher.
Will the rally continue?
Watch this week’s Market Minute to find out what we’re watching next.
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