The record-breaking rally in U.S. stocks is about to face serious scrutiny as Wall Street heads into a pivotal week marked by the start of corporate earnings season and the release of a closely watched inflation report.

The S&P 500, which has surged over 26% since April, now sits at all-time highs. However, with inflationary concerns intensifying—especially amid newly announced U.S. tariffs on foreign imports—investors are bracing for fresh data that could reshape expectations for interest rates, consumer demand, and corporate profitability.

Though the benchmark index has remained relatively flat this week, market analysts say upcoming earnings from major U.S. corporations will provide critical insight into how companies are weathering economic headwinds, including higher input costs and potential disruptions in global trade.

“Investors want reassurance that strong valuations are justified by earnings growth, especially with interest rates still a factor and inflation stubbornly present,” noted a senior market strategist at a Wall Street firm.

The next key test arrives with the release of Consumer Price Index (CPI) data, which could influence the Federal Reserve’s policy path. A hotter-than-expected print may fuel speculation that rate cuts could be delayed, potentially tempering investor enthusiasm.