The S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) are both hovering near record highs as escalating tariffs and a growing debate about monetary policy have done little to shake markets.

The Nasdaq Composite led the gains last week, rising more than 1.6%. Meanwhile the S&P 500 popped about 0.7% while the Dow Jones Industrial Average (^DJI) was just above the flat line.

In the week ahead, 112 S&P 500 companies are set to report quarterly results. Reports from Alphabet (GOOGL, GOOG), Tesla (TSLA), and Chipotle (CMG) will be in focus.

Meanwhile, a quiet week of economic data releases will be highlighted by updates on activity in the services and manufacturing sectors as the Federal Reserve enters its blackout period ahead of its July 29-30 policy meeting.

Rate debate heats up

On Thursday, Fed governor Christopher Waller made his clearest call yet for an interest rate cut in July. During a speech in New York, Waller said the Fed should cut rates in July, adding that the federal funds rate is more than one full percentage point higher than it should be.

“With inflation near target and the upside risks to inflation limited, we should not wait until the labor market deteriorates before we cut the policy rate,” Waller said.

However, recent moves in market pricing have shown investors growing less optimistic about rate cuts. Last week, signs of stickiness in consumer inflation combined with a stronger-than-expected June retail sales report and weekly unemployment filings pushed out interest rate cut bets.

As of Friday, markets were pricing in just a 5% chance that the Federal Open Market Committee would cut rates in July, per the CME FedWatch Tool. A month ago, markets had priced in closer to a 13% chance.

“We expect the committee to arrive at a consensus to cut rates in September as the hawkish case weakens with the job market loosening further and no signs of tariffs spilling over into a broader inflationary trend,” Citi chief US economist Andrew Hollenhorst wrote in a note to clients on Friday.

Read more: How the Fed rate decision affects your bank accounts, loans, credit cards, and investments

In a recent speech, Federal Reserve governor Christopher Waller said the Federal Reserve should cut interest rates at its upcoming July meeting. (Reuters/Brendan McDermid/File Photo) · REUTERS / Reuters

Earnings scorecard

Big banks kicked off the second quarter earnings reporting period with a string of better-than-expected results. Netflix (NFLX) followed those up on Thursday night with an estimate-beating report. Both the streaming giant and the large financial banks said that the US consumer continues to hold strong.

On an aggregate level, the S&P 500 is now pacing to report earnings growth of 5.6% compared to the same quarter a year ago, per FactSet data. This is above the 4.8% analysts were expecting just last week.