U.S. stocks climbed higher on Monday, brushing off growing trade tensions as investors shifted their attention to upcoming earnings from tech giants Alphabet and Tesla.
The Dow Jones Industrial Average rose 220 points (0.52%), while the S&P 500 and Nasdaq gained 0.58% and 0.75%, respectively pushing all three indexes closer to fresh record highs.
Much of the excitement is being fueled by the AI-driven momentum in tech stocks. Investors are betting on strong quarterly results from Alphabet and Tesla, both of which are scheduled to report on Wednesday. These will be the first major tech earnings of the quarter and could set the tone for the broader market.
But with that optimism comes caution.
Some economists are raising red flags over sky-high valuations, particularly in the AI sector. Torsten Slok, chief economist at Apollo Global Management, warned that the market is starting to resemble the dot-com bubble of the late 1990s and possibly something even more extreme. According to Slok, today’s top S&P 500 companies including Nvidia, Microsoft, and Apple have P/E ratios that exceed levels seen at the peak of the dot-com era.
“The AI bubble could be worse than what we saw in 1999,” Slok said, noting how market euphoria has driven tech valuations to unprecedented highs.
Trade Tensions Simmer in the Background
Meanwhile, in the background, geopolitical and trade tensions continue to brew. The European Union is preparing for retaliatory measures after President Donald Trump floated the idea of raising tariffs on EU imports to 20%, up from a previously proposed 15%.
A German official, speaking to the Wall Street Journal, didn’t mince words: “If they want war, they will get war.”
In response, the EU is pushing for a 10% baseline tariff with room for industry-specific exemptions, hoping to avoid a full-blown trade conflict.
The Bottom Line
As Wall Street eyes blockbuster earnings from Alphabet and Tesla, markets are soaring but so are concerns about overvaluation and geopolitical risks. Whether this rally has more room to run may depend on whether these tech titans can deliver results that match the market’s sky-high expectations.
