Wall St Week Ahead Industrial sector's gains to be tested as earnings ramp up

NEW YORK (Reuters) - The industrial sector has led the way for U.S. equities during a topsy-turvy year on Wall Street, but its strength will be tested as earnings season heats up.

S&P 500 industrials which include aerospace companies, electrical equipment and machinery makers, transportation firms and building products companies, have gained 15% so far in 2025. That's the best year-to-date performance of the S&P 500's 11 sectors and more than double the gain of the overall index.

Momentum for the industrials sector and the broader market will be in focus with a heavy upcoming week of second-quarter earnings, which includes reports from more than one-fifth of the S&P 500, led by Alphabet and Tesla the first of the "Magnificent Seven" megacap tech and growth companies to report.

The S&P 500 has surged 26% since April, as investors shook off fears about a recession which had stemmed from President Donald Trump's "Liberation Day" tariff announcement.

This earnings season "seems to be especially important because of the rebound that the market has had," said Chuck Carlson, chief executive officer at Horizon Investment Services. "I would think that that has built in a fair amount of optimism in terms of earnings."