NEW YORK (Reuters) -A rally that has taken U.S. stocks to record highs will be tested in the coming week by the kick-off of corporate earnings season and a key inflation report as investors hope to learn more about the economic fallout from tariffs.

The S&P 500 is little changed so far this week, but the benchmark stock index has surged 26% since April to all-time high levels.

Stocks this week largely shrugged off President Donald Trump's threats of more aggressive tariffs on over 20 countries set to take effect August 1. Trump also announced plans for higher levies on copper, pharmaceuticals and semiconductors.

"Investors are looking toward the end of the year into next year where fundamentals are better, and they are willing to look through some short-term uncertainty as they get there," said Chris Fasciano, chief market strategist at Commonwealth Financial Network.

After a strong first-quarter reporting season helped lift stocks, analyst estimates for second-quarter results have weakened. S&P 500 companies are expected to have increased profits by 5.8% from the year-earlier period, down from an expectation of a 10.2% gain on April 1, according to LSEG IBES.

The percentage of S&P 500 companies beating consensus estimates rose to 78% in the first quarter after the rate had declined the prior three quarters, Ned Davis Research analysts said.

"Another reading in the upper 70s would suggest that companies have a grasp not only on tariffs, but also on the broader macro environment," the Ned Davis analysts said in a note.

Reports from banks will dominate the week, including results from JPMorgan Chase, Bank of America and Goldman Sachs ( GS ). Among the other major companies reporting next week are Netflix ( NFLX ), Johnson & Johnson ( JNJ ) and 3M.

In focus will be whether executives indicate if they are able to forecast and make decisions in areas such as capital investment and hiring despite the still-shifting trade backdrop, Fasciano said.

"The uncertainty hasn't gone away, but I'm curious to see how much of the uncertainty they feel they have a better understanding of in terms of longer-term plans," Fasciano said.

The impact of tariffs will also be at issue with the consumer price index for June, due on Tuesday, which will shed light on inflation trends. CPI is expected to increase 0.3% on a monthly basis, an acceleration from the prior month, according to economists polled by Reuters. A busy week of economic data will also be highlighted by monthly retail sales on Thursday.

Investors are eager for the Federal Reserve to resume interest rate cuts, but central bank officials have cited worries that tariffs will drive inflation higher as reasons for holding off on changing monetary policy.

The S&P 500 is up nearly 7% in 2025, just over halfway through the year. In the latest sign of positive stock momentum, Nvidia Corp ( NVDA ) this week became the first publicly traded company to hit $4 trillion in market value, fueled by a massive run for AI chipmaker's stock price.

Stocks have rebounded after plunging in April following Trump's "Liberation Day" announcement of sweeping global tariffs.

This past Wednesday was expected to be a key deadline, marking the end of Trump's pause on many of the harsh "reciprocal" tariffs he unveiled in April. This week, he launched an array of levies, many scheduled to take effect on August 1.

Still, most investors appear to be banking on the U.S. avoiding higher tariff rates as Washington strikes deals in coming weeks with trading partners such as Japan and South Korea, said Anthony Saglimbene, chief market strategist at Ameriprise Financial.    

"That's what the market has built in," Saglimbene said. "If we don't get that, then I think there is probably some risk that we would see some higher near-term volatility if the White House actually implements some of these aggressive tariff measures."

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