Earnings growth powers stocks higher

US equities are pushing to new highs as investors look past the Iran conflict and focus on stronger-than-expected earnings, resilient consumer spending, and a firm labor market. Inflation has picked up with energy prices, which has lifted Treasury yields and kept the Federal Reserve cautious about cutting rates in the near term.

Even so, corporate profits have been impressive, with margins expanding and technology leading gains across sectors. Growth appears to be improving after a softer first quarter, supported by tax refunds, manufacturing strength, and expectations for better activity if energy prices ease later this year.

The main risks remain geopolitics, sticky inflation, and any slowdown in consumer balance sheets after recent spending strength. For investors, the backdrop still favors equities over bonds near term while also calling for discipline around valuation and rate sensitivity.