Five major equity indices entered the third quarter reading five different structures, and that split is now shaping how traders are approaching Soxl Stock and the rest of Wall Street. The S&P 500 is holding in the upper half of a broad ascending channel, while Nasdaq is still consolidating beneath its highs, a sign that the rally has not ended so much as changed character.
The reason the setup matters now is simple: earnings are still doing the heavy lifting. S&P 500 companies have beaten analysts’ forecasts for seven straight quarters, and Q2 2026 is expected to come in near 23% year-on-year earnings growth. That kind of follow-through helps explain why buyers have kept leaning into the market even as policy has turned less helpful.
One part of that support is coming from AI spending that no longer looks marginal. The four largest hyperscalers spent a combined $410 billion on capacity last year and have guided that figure toward $725 billion this year, a jump of $315 billion, or roughly 76.8%. In market terms, that is not just spending for the sake of spending. It is a continuing buildout that keeps feeding the same stocks investors have used to power the advance off the 2025 lows.
Warsh has been part of the market’s policy backdrop as well, even by what he chose not to do. He declined to submit a dot and has signaled that he looks through supply-shock inflation, a stance that fits his view that AI is structurally disinflationary. That matters because the June projection round moved the other way: the median 2026 dot rose to 3.80%, cuts were pushed out to 2027, and the policy rate has already eased to a 3.62% midpoint.
That hawkish June reading is real, but it may not be the lasting story. The more durable shift is toward a Fed that is less guided and less willing to promise a smooth path of cuts, even as the market keeps pressing higher on earnings and AI capital spending. That leaves SPX pinned near a channel top after touching it in early June and easing back to around 7,499, with anchored VWAP from the April low now curling in near 7,259.
For investors, the next test is whether the spending wave and the earnings beat streak can keep overpowering a more restrictive policy outlook. The next named event is the Fed minutes, and that will matter because the market has already been told that the easy part of the cuts story may be over.
