July 21 (Reuters) - The S&P 500 and the Nasdaq hit record highs on Monday, lifted by Alphabet and other megacaps ahead of several earnings reports this week, while investors bet on potential trade deals to blunt economic damage from the Trump administration's global tariffs.
Google-parent Alphabet (GOOGL.O) rallied over 2% ahead of its quarterly report on Wednesday. It and Tesla (TSLA.O), also reporting on Wednesday, kick off earnings from the so-called "Magnificent Seven", and their results may set the tone for other heavyweight companies reporting in the next several days.
Tesla traded near flat, while Apple (AAPL.O) and Amazon (AMZN.O) each rose about 1%.
Verizon (VZ.N) rallied 5% after the telecommunications company boosted its annual profit forecast.
Analysts on average expected S&P 500 companies to report a 6.7% increase in earnings for the second quarter, with Big Tech driving much of that gain, according to LSEG I/B/E/S.
"So far, companies that have reported have, in general, met or beat guidance from the prior quarter, and we haven't seen any degradation either in corporate profits or consumer spending," said Tom Hainlin, national investment strategist at U.S. Bank Wealth Management in Minneapolis.
With U.S. President Donald Trump's August 1 tariff deadline approaching, the S&P 500 (.SPX) is up about 8% year to date, with investors betting the economic damage from tariffs will be less than feared.
U.S. Commerce Secretary Howard Lutnick said on Sunday he was confident the United States could secure a trade deal with the European Union, even as EU members explored possible counter-measures against the United States.
Trump has threatened 30% tariffs on imports from Mexico and the EU, and sent letters to other trading partners, including Canada, Japan and Brazil, setting tariffs ranging from 20% to 50%.
The S&P 500 was up 0.56% at 6,332.05 points.
The Nasdaq gained 0.73% to 21,048.31 points, while the Dow Jones Industrial Average was up 0.49% at 44,560.36 points.
Nine of the 11 S&P 500 sector indexes rose, led by communication services (.SPLRCL), up 1.93%, followed by a 1.27% gain in materials (.SPLRCM).
Investors focused on how tariff uncertainty is impacting the U.S. economy will scrutinize jobless claims data and the July business activity report, expected on Thursday.
They will also watch a speech by Federal Reserve Chair Jerome Powell on Tuesday for clues about when the Fed might cut interest rates, especially after mixed inflation signals last week.
Traders have largely ruled out a July rate cut, and they now see a greater than 50% chance the Fed will cut by its September meeting, according to CME Group's FedWatch tool.
Advancing issues outnumbered falling ones within the S&P 500 (.AD.SPX) by a 1.7-to-one ratio.
The S&P 500 posted 17 new highs and 6 new lows; the Nasdaq recorded 88 new highs and 45 new lows.
Reporting by Nikhil Sharma and Pranav Kashyap in Bengaluru, and by Noel Randewich in San Francisco; Editing by Maju Samuel, Shinjini Ganguli and Aurora Ellis
