Stocks Charge Higher on Trade Optimism and Tech Resurgence

Market Overview

Equity markets wrapped up the first half of 2025 with strength as the S&P 500 surged 3.45% on the week to a record close of 6,173.10. Communication services (+6.2%) and technology (+4.7%) led sector gains as Micron’s earnings and AI momentum lifted sentiment. The Nasdaq posted an impressive 4.25% weekly advance, while the Dow rose 3.83%. A tentative ceasefire in the Middle East and positive developments in U.S.-China trade negotiations helped buoy risk appetite. However, gains were tempered Friday after President Trump abruptly ended trade talks with Canada.

International markets joined the rally: MSCI EAFE rose 3.11% and MSCI EM added 3.37%. Japan and Taiwan outperformed on tech tailwinds, while European equities rebounded as NATO spending alignment and steady economic data offset political frictions in the UK.

In commodities, easing geopolitical risks weighed heavily on oil (-12% week-over-week), with WTI crude falling to $65.24. Gold slipped as tensions cooled, while silver steadied and copper rallied amid global growth optimism.

Federal Reserve Insights and Economic Roundup

Fed Chair Powell reiterated a data-aware yet cautious stance on rate cuts, highlighting the risk of inflation reaccelerating due to tariffs. However, four straight months of cooling inflation, softening labor data, and weak Q1 GDP figures have markets anticipating two cuts by year-end. The PCE index — the Fed’s preferred inflation gauge — remained tame, rising just 0.1% in May, reinforcing a disinflationary trend.

Meanwhile, revised Q1 GDP revealed a deeper-than-expected contraction at -0.5%, driven by sluggish consumer spending. Durable goods orders surprised to the upside, and personal income and spending both declined. The broader takeaway? Growth is slowing, but not collapsing — potentially justifying a more accommodative Fed in Q3.

Treasuries rallied in response. The 10-year yield slipped 9 basis points to 4.27%, and the 2-year yield dropped 17 basis points, with market pricing reflecting rising expectations for easing ahead.

The Week Ahead

Here are the key economic reports on deck for the holiday-shortened week:

• Monday: MNI Chicago PMI (Jun), Dallas Fed Manufacturing Activity
• Tuesday: ISM Manufacturing PMI, Construction Spending, JOLTS Job Openings
• Wednesday: ADP Employment Change, Challenger Job Cuts
• Thursday: June Nonfarm Payrolls, Unemployment Rate, Average Hourly Earnings, Initial Jobless Claims, ISM Services PMI
• Friday: U.S. markets closed for Independence Day

Markets will be closely watching Thursday’s jobs data for further signals on labor market momentum and Fed policy implications.