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What it will take to keep stocks at all-time highs

The stock market finished the week at all-time highs, but will it last?

For the answer, Wall Street will be listening next week to America’s CEOs.

The Dow Jones industrial average climbed 0.9 percent, to close at an all-time high of 27,332.03 on Friday, having crossed the 27,000 threshold for the first time on Thursday.

The S&P 500 and Nasdaq also notched fresh highs Friday, with the S&P closing above 3,000 for the first time.

Meanwhile, earnings season kicks off in full force next week, and companies’ quarterly results and forecasts for the rest of the year will determine whether the rally has legs.

Commentary from bigwig bankers like Jamie Dimon and David Solomon will be of particular interest, as investors scramble to gauge the confidence of business owners and appetite of consumers for spending, market strategists say.

“There will be a tremendous focus on guidance,” said Quincy Krosby, chief market strategist at Prudential Financial. “Investors will want to hear what CEOs and CFOs are saying.”

Citigroup is the first of the big banks to report with its results coming Monday.

JPMorgan, Goldman Sachs and Wells Fargo follow on Tuesday.

“Bulls will want to see this earnings season get off to a good start. It’s not the numbers, it’s the tone,” explained Michael Antonelli, managing director at Baird.

Analysts have been predicting a weaker earnings season as companies grappled with tariff worries and slowing global growth over the quarter.

“Does the market see past weaker earnings if CEOs and CFOs tell a good story?” Krosby said. “Each bank has a different constituency and you get a very clear picture of the US economy as well as a snapshot of what they see internationally.”

Markets were on a roller-coaster ride in the second quarter as tensions between the US and its trading partners were reignited and investors fretted over whether or not the Federal Reserve would slash interest rates to provide fuel for the economy.

But the stock market got a shot in the arm this week after the Fed signaled it was poised to lower rates at the conclusion of its meeting July 30-31.

“Earnings jitters have preceded every earnings season in recent memory, but this time the market is not pulling back, it is making new highs which is telling you something,” said Chris Rupkey, chief financial economist at Mitsubishi UFJ Financial Group.

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