Wins for stocks start coming, and they don’t stop coming. The S&P 500 extended its record run this week, climbing another 1.7% to finish at a high of 6,279.35. The same euphoria catapulted the Nasdaq Composite to gain 1.6% to close at a record of 20,601.10.
None of it would have been possible without tech stocks once again leading the charge higher. Nvidia rose to another record, ticking up 1% this week. Apple rose 6.2%, lifted by reports that it may outsource AI development to power a new version of Siri—helping ease investor concerns over the company’s lagging AI strategy.
And bitcoin’s recent push to all-time highs may be signaling there’s more room to run. Fundstrat Head of Research Tom Lee views the cryptocurrency as a key leading indicator, and with its promising performance in mind, he reaffirmed his year-end target of 6,600 on the S&P 500.
On Wednesday, the ADP report painted a worrying picture about the labor market, showing a steep 33,000 decrease in private-sector employment in June. But these fears were erased by the June jobs report, which showed that the U.S. economy added 147,000 new jobs, well above expectations for a 110,000 gain. This stronger-than-expected number indicates continued labor market resilience.
After the report, the small number of odds placed on a July rate cut mostly evaporated. This year, investors are wagering on slightly more than two cuts. The figure has been creeping up because the economy is showing signs of no longer being as hot and inflation is falling. Federal Reserve officials, however, anticipate making two cuts this year.
“The question, of course, is if the Fed is talking about two cuts and the market is pricing in a bit more, is the Fed behind the curve?” Lee said.
Head of Technical Strategy Mark Newton doesn’t expect to see much selling pressure in July and expects it to be a positive month because of seasonal behavior noted during the first year of a presidential term.
However, he added that there might be a few days of weakness, which will eventually lead to a sharp rally back to monthly highs in August.
“Investors should pay close attention if there appears to be some weakness in stocks that have gotten overbought and are now rolling over to violate ongoing uptrends. At present, I don’t suspect this will prove to affect all of technology. However, recent history suggests it’s wise to pay attention during this time,” Newton said.
Chart of the Week
It seems like gone are the days when tariff worries dictated investors’ every move. The broad-based index has rebounded about 28% since the Liberation Day-driven April lows, but investors don’t trust it. A 20-day simple moving average of net bulls less bears remains down 22%, according to the latest American Association of Individual Investors survey. “If you look at 28% rallies, and we just had one since April lows, sentiment is usually a lot more positive, so you can see this is unprecedented,” said Fundstrat Head of Research Tom Lee in his Macro Minute videos. “This is the most-hated rally basically ever.”
Bloomberg’s Interest rate probabilities which show what the swaps market is pricing in for the Fed shows that now both July and September show not even 1 rate cut being priced in and this likely will not happen until October. As economic data has proven resilient, the odds of rate cuts have continued to diminish and now only 52 bp of cuts are seen likely between now and after the December FOMC meeting. The Administration will certainly push back on this, but for now with the threat of Fiscal uncertainty and the US Treasury’s plans on more Bill sales in their act of rebuilding its account at the Federal Reserve ($750-$800 billion is anticipated, up from $360 Billion) this helps Fed finance US Debt with more bills, which frees up liquidity, & should be good for Treasuries and Equities, albeit with possible structurally rising inflation.
Today’s Economic data fit in perfectly with Powell’s message of “sitting tight” for now, not immediately cutting, as better than expected Jobless Claims along with better actual Jobs data should mean the Fed continues to be on the sidelines. However, this is bearish for Treasuries, and following up on last night’s comments for yields to start to turn higher, we saw a quick move to 4.35% in TNX today along with a bear Flattener in the Yield curve as 2yr yields jumped to 3.91% (since have retreated slightly to 3.87%, still up 7 bps today) I suspect that SPX runs up into next Tuesday ahead of minor consolidation. However, it’s yields that need watching closely as any hint of TNX exceeding 4.35% that might cause an uptick in bond volatility could eventually spook the stock market. I do expect a push up to near 4.70% but as long as this is based on better economic growth and not inflation, than equities likely wont be spooked too much.
TSLA -0.80% bounce today on worse than expected deliveries is actually a bullish development, as the stock managed to bottom out yesterday right near its uptrend from April lows. As daily charts show, TSLA managed to hold this area of which had also served as support back in early June and snapped back today. It has filled the gap from earlier this week, but yet still requires a move up over $325.50 to suggest it can begin a move back up to test 6/23 peaks at 357.54. This level will serve as the real “line in the sand” towards thinking TSLA requires more consolidation vs. TSLA can begin to trend up sharply to test last December’s highs. Overall, there needs to be evidence of momentum improving on its daily charts before it’s possible to forecast a linear rise back to the highs. While its cycle composite does show a better 2H 2025 than 1st Half, the area i feel might be important to keep a close eye on lies at $357.54.
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