Market participants have been closely watching the earnings season to justify the high valuations in equities. The S&P 500 is currently trading at around 18 times earnings estimate for the next 12 months, compared to its long-term average of 15 times.

Related: ETF Performance Report: July 2017

According to Thomson Reuters, S&P 500 companies are expected to have grown 10.8% in the second quarter.

“We are two-thirds through the earnings season and estimates are going only higher, including for the full year, which is helping support the fundamentals-driven market.” Northey added.

However, the positive market sentiment has been somewhat dampened by soft U.S. economic data Tuesday after U.S. auto makers revealed sales dropped sharply in July.

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