To date, more than 45 percent of S&P 500 companies have reported results so far this quarter, with 68 percent of firms topping earnings expectations and 56 percent beating revenue estimates, according to data from Thomson Reuters. If all remaining companies report earnings in line with estimates, earnings will be up 4.1 percent from last year's second quarter.
Looking ahead to the third and fourth quarters, Cavanaugh said companies haven't been lowering the earnings bar, which is an encouraging sign that growth will likely continue.
"I see the market hitting new highs for the year and we'll probably end higher than where we are now, barring any major global event or political wrangling," added Cavanaugh, who has a price target of 1,760 on the S&P 500.
On the economic front, weekly jobless claims increased by 7,000 to a seasonally adjusted 343,000, according to the Labor Department. Economists had expected a reading of 340,000 last week. Still, the four-week average of new claims dipped 1,250 from a week earlier.
And durable goods orders gained more than expected, with non-defense capital goods orders excluding aircraft rising 0.7 percent in June, according to the Commerce Department, edging past expectations for an increase of 0.5 percent.
The Treasury auctioned $29 billion in 7-year notes with a high yield of 2.026 percent. The bid-to-cover ratio, an indicator of demand, was 2.54, versus a recent average of 2.65.
European shares finished in the red with investor confidence curbed by a mixed bag of earnings from major companies and concerns about slowing growth in China.
And Asian markets ended lower, even as the Chinese government announced new measures to lift certain areas of the economy, including small businesses.