WEEKLY MARKET SUMMARY
Global Equities: US stocks once again shrugged off geopolitical and economic concerns as the S&P 500 hit a new all-time high on Friday to cap off a 3.5% weekly gain. The Nasdaq Composite led domestic large cap indices with a 4.3% surge and the Dow Jones Industrial average kept pace as well, gaining 3.8% in the weekly session. Small caps rose 3.0% and Developed Market stocks jumped 3.5%. Emerging Markets pulled back on Friday but still ended the week up 3.8%.
Fixed Income: Bond yields eased during the week, with the 10-Year yield falling below 4.25% for the first time since May 1st. Expectations for a July rate cut increased slightly but September remains much more likely. Bond funds attracted $6.8 billion in weekly inflows, with heavy demand for high yield corporate bonds which advanced 0.7%.
Commodities: Crude prices plunged as the ceasefire between Iran and Israel appeared to hold and Iran kept the Strait of Hormuz open for shipping. US West Texas Intermediate (WTI) ended the week at $65.12. Gold prices pulled back sharply as investors shifted back to “risk on” posture, falling from over $3,400 Monday to $3,285 on Friday.
WEEKLY ECONOMIC SUMMARY
Powell Testimony: Fed Chair Jerome Powell was in the hot seat before Congress on Tuesday and Wednesday, delivering his Semiannual Monetary Policy Report. Powell stressed that while inflation data has been improving, the Fed is more concerned with forward looking data and believes that the tariffs will reignite inflation in the second half of the year. Powell stated that had tariffs not been imposed, the Fed likely would have already cut rates and left the door open for rate cuts if trade deals are reached. Markets reacted positively to the comments despite little progress on any trade deals being reached ahead of the July 9th deadline for the 90-day pause.
Inflation Creeps Up: The Fed’s favorite inflation indicator, the Core Personal Consumption Expenditures (PCE) Index, showed inflation rose 0.2% in May to an annual rate of 2.7%, which was slightly hotter than expected. The impact of tariffs may be starting to show in the data as goods inflation has picked up after being net negative (deflationary) earlier in the year. The Fed is likely to hold firm while Core PCE runs above its 2% target. Year-end projections from the Fed and all major Wall Street banks predict inflation will rise to around 3%.
Israel-Iran Conflict: Following the US entry to Israel’s military campaign against Iranian nuclear sites, the conflict looked poised to escalate further as Iran fired a symbolic retaliatory volley of rockets at the US base in Qatar, all of which were intercepted prior to impact. The US elected not to respond with force, and instead brokered a ceasefire that appears to have been held despite minor violations early in the week. Markets have reacted with optimism that the fighting is done, and the broader diplomatic community has engaged in talks to find a way forward.
CHART OF THE WEEK
The Chart of the Week shows a three-year look at the S&P 500 Index, with the 50-day (blue line) and 200-day (red line) moving averages. The S&P 500 has regained all its 2025 losses and hit a new all-time high as we approach the halfway point of the year. The index is also enjoying a bullish technical setup as the 50-day is poised to cross the 200-day in a “golden cross” which typically indicates positive upward momentum. Earnings season could very well provide the jolt needed, but the unpredictable tariff drama which could potentially derail this train cannot be dismissed. This is looking like a pivotal moment for the market.
