Client Login

Last Week on Wall Street – July 4th, 2025

  S&P 500: 2.25%      DOW:  3.38%       NASDAQ:  2.15%      10-YR Yield: 4.34%

What Happened?

A short holiday week brought nothing but fireworks for Wall Street as markets ripped to new all-time highs. Despite only four trading days, markets surged, fueled by strong economic data and renewed optimism around the Fed’s path forward.

The S&P 500 and Nasdaq notched record closes, with investor sentiment reignited by a string of upside surprises in the labor market and a composed, measured tone from Fed Chair Jerome Powell. While Powell remained cautious, he struck a confident note, reiterating the Fed’s commitment to a data-dependent approach and signaling no urgency to cut rates. That message, coupled with robust labor market data, strengthened the soft-landing narrative and painted a picture of an economy that may be sturdier than headlines suggest. 

Equity markets celebrated. Treasury yields held relatively steady, while rate cut expectations were pushed further out, signaling that the economy may not need as much help as some feared. Sectors tied to economic growth, like tech and industrials, led the charge, reflecting investor belief that underlying fundamentals remain strong.

We’ll dig deeper into Powell’s latest messaging and the implications of the labor data below.

Federal Reserve chair sends strong message on July interest rate cut

  • Powell cites upcoming tariffs as a major factor blocking a July cut, prompting the Fed to hold off on rate reductions for now 
  • Markets sharply lowered expectations for a July cut, with September now looking more probable

The key takeaway – As the old saying goes, pressure makes diamonds. Investors are watching closely to see if that adage holds true for Federal Reserve Chair Jerome Powell. With businesses and markets hinging on every signal about the future of interest rates, Powell’s resolve is being tested like never before.

The calls for a rate cut have grown louder. Market volatility, coupled with the economic overhang from tariffs, has many arguing that the Fed should act swiftly to ease rates and provide support before momentum fades. But Powell isn’t budging.

Despite mounting pressure from the White House, Wall Street, and global investors, Powell has held the line. Leaning on recent hard data, he points to a labor market that remains resilient and inflation figures that don’t justify an immediate rate reduction. In his view, the economic fundamentals simply don’t warrant action, at least not yet.

For now, Powell’s patience appears to be working. Markets haven’t unraveled, and the Fed’s steady hand has lent a sense of predictability amid uncertainty. So perhaps the diamond is indeed beginning to take shape. But with postponed tariffs still looming and economic ripple effects yet to be fully felt, it’s unclear how long the Fed can afford to remain still.

Time, as always, will be the judge.

Hiring Defied Expectations in June, With 147,000 New Jobs

  • Initial jobless claims came in below expectations at 233,000 from 240,000
  • U.S. unemployment shocked markets and smashed the expected 110,000 with 147,000.
  • U.S unemployment rate declined from 4.3% to 4.1%.

The key takeaway – Despite growing concerns about economic headwinds, particularly from tariffs, the latest U.S. labor reports have delivered a dose of unexpected optimism. The numbers crushed expectations, quieting fears that the economy is sliding toward stagflation.

The labor market, often seen as a leading indicator, plays a critical role in shaping economic outlooks. When businesses slow hiring, it signals hesitation to invest in future growth, often a red flag for looming downturns. But when hiring is strong, it reflects confidence, expansion plans, and a willingness to deploy capital.

That’s exactly what the recent data showed.

No one is likely more relieved than Fed Chair Jerome Powell. After enduring waves of criticism about his handling of monetary policy amid volatile conditions, Powell now has stronger footing. These labor market results give credibility to his stance that the economy remains resilient and doesn’t yet warrant a rate cut.

For markets and investors, the report is a breath of fresh air, injecting optimism at a time when it was in short supply.  

From Around the Watercooler