MARKET COMMENTARY
Markets are rising modestly to start the week as the U.S. and Canada agree to resume trade talks following Canada’s withdrawal of its digital services tax. Today marks the end of a tumultuous quarter, defined by a sharp decline triggered by President Trump’s tariffs, followed by a remarkable rebound. Despite the recovery, the U.S. dollar has posted its worst start to the year since 1973, pressured by Trump’s trade policies and rising debt levels, which are prompting investors to reevaluate their exposure to the currency.
All three major U.S. indexes (Dow, S&P 500, and Nasdaq Composite) posted strong gains last week, with the S&P 500 and Nasdaq ending at new closing highs, their best levels since February and December. Artificial intelligence momentum, easing tariff concerns, and decreasing conflict in the Middle East were key drivers behind the rally. Safe-haven assets also advanced, with gold up 0.72% and the 10-year Treasury yield falling to 4.23% in intraday trading Monday.
Interest rates remained steady in their current range of 4.25% to 4.5% following Federal Reserve Chair Jerome Powell’s congressional testimony as the Fed waits to assess the broader economic impact of Trump’s tariffs. President Trump responded by sending a handwritten letter to Powell demanding lower rates, citing foreign central banks as examples.
From a technical perspective, U.S. stocks climbed further last week, with the S&P 500 hitting a record 6,173, up 3.4% over five sessions, and trading well above key moving averages. Momentum remains strong, though RSI levels are elevated, suggesting traders are watching closely for signs of overheating. The Nasdaq Composite also set a new high at 20,273, driven by continued gains in mega-cap tech stocks like Nvidia and Amazon, and up 1.5% over the past three days amid renewed AI enthusiasm. In contrast, small caps lagged, with the Dow Jones U.S. Small-Cap Index hovering near 13,511, reflecting selective risk appetite.
On the corporate front, major banks such as Goldman Sachs and Wells Fargo rallied after the Federal Reserve’s stress tests showed they are well positioned to weather a severe downturn. Analysts expect a 12% rise in share repurchases for the median of the 22 tested banks, along with an average 5% increase in dividend payouts. Meanwhile, a GOP-led bill aiming to phase out tax credits for wind, solar, and other renewable energy projects has clean energy advocates and businesses bracing for impact.
Economic Releases This Week
Monday: Chicago Business Barometer (PMI)
Tuesday: Fed Chair Jerome Powell Speech, Final U.S. Manufacturing PMI
Wednesday: ADP Employment
Thursday: U.S. Employment Rate, U.S. Unemployment Rate, U.S. Trade Deficit
Friday: None (July 4th)
Stories to Start the Week
Senate races to pass Donald Trump’s flagship tax bill as deadline looms
Netanyahu says Iran war creates ‘new opportunities’ to free Gaza hostages
U.S, Canada to resume trade talks after Ottawa drops digital tax
‘Death to IDF’ chant at Glastonbury music festival sparks uproar
Nvidia’s business is booming despite being shut out of China