Alphabet soars, Shanghai jumps, but “dramatic widening in credit spreads” ahead

Markets rose on Tuesday.

The S&P 500 rose 0.5 percent, the STOXX Europe 600 rose 0.9 percent and the Nikkei 225 rose 0.5 percent.

Leading gainers among S&P 500 stocks was Alphabet, which soared 3.9 percent after reporting strong results. Facebook and Amazon rose 1.8 percent and 1.5 percent respectively.

Despite those gains, the Nasdaq Composite slipped 0.01 percent.

“It leads me to believe that underneath it all, investors are worried about the tariff situation and what the implications are going to be for corporate profits in the third quarter,” said Jim Awad, senior managing director at Hartland & Co.

Among the top-performing markets on Tuesday was China, where the Shanghai Composite jumped 1.6 percent after China's State Council said on Monday that it would engage in more “vigorous” fiscal policy.

Meanwhile, Jim Paulsen, chief investment strategist at The Leuthold Group, told CNBC on Tuesday that international markets should be “maximally overweighted” relative to US stocks.

Paulsen noted that the real earnings yield of US stocks is low, which is where bull markets usually end.

David Rosenberg, Gluskin Sheff chief economist and strategist, appears more concerned about the credit market.

“The corporate bond market is today’s bubble,” he told CNBC on Monday. “Something tells me in the next six months that we’re going to have a dramatic widening in credit spreads.”