U.S. stock markets wrapped up a holiday-shortened week on a strong note, with both the S&P 500 and Nasdaq Composite reaching new all-time highs. While investors in the U.S. showed confidence, European markets remained cautious amid ongoing uncertainty about America’s aggressive trade tactics.
Stocks Boosted by Strong Employment Data and Policy Advances
On Thursday, the S&P 500 and tech-heavy Nasdaq closed at record highs, propelled by a robust jobs report that surpassed expectations. This upbeat employment data eased fears that the Federal Reserve might cut interest rates soon. The S&P 500 gained 0.8%, the Nasdaq rose 1.0%, and the Dow Jones Industrial Average increased 0.7%, inching closer to its own record levels. U.S. markets were closed on Friday in observance of Independence Day.
June’s employment figures showed solid job growth, though private sector hiring slowed to its lowest rate in eight months. The unemployment rate dipped slightly to 4.1%, partly due to more workers leaving the labor force, and average workweek hours shortened, suggesting some reduction in hours worked.
Overall, the steady labor market combined with moderate inflation has investors anticipating the Fed will hold interest rates steady at the July 29-30 meeting.
Nvidia Approaches Historic Valuation Milestone
Nvidia, the leading producer of cutting-edge AI chips, saw its market capitalization surge toward a staggering $4 trillion, putting it on track to become the most valuable company in history. The firm continues to ride the wave of excitement surrounding artificial intelligence advancements.
Congress Approves Trump’s Sweeping Tax and Spending Plan
The U.S. House passed a major tax and spending bill backed by President Trump, securing a legislative victory despite some dissent within the Republican ranks. The package extends the 2017 tax cuts and boosts funding for defense and border security. The bill is expected to be signed into law by Trump soon.
Supporters argue the law will stimulate economic growth, with Trump calling it a “rocket ship” for the economy. However, critics, including some Republicans, worry about the impact on the national debt, which the Congressional Budget Office estimates will rise by over $3 trillion. The legislation also trims funding for certain food assistance and healthcare programs and rolls back some clean energy tax incentives. The White House disputes the debt impact projections.
Trade Tensions Loom Ahead of Tariff Deadline
Despite positive economic news and progress on legislation, markets remain uneasy about the imminent end of a tariff pause scheduled for next week. While the administration promised individual trade deals, it has only reached agreements with China, the UK, and Vietnam so far.
President Trump announced plans to send letters to trade partners outlining new tariffs on their exports starting Friday, acknowledging the challenge of negotiating with about 170 countries and signaling a tougher stance ahead.
Middle East Ceasefire Talks and Diplomatic Efforts
In diplomatic developments, President Trump stated that Hamas might decide on a ceasefire with Israel within 24 hours. The Israel-Hamas conflict, which escalated in October 2023, recently saw Israel agree to a 60-day ceasefire framework that could pave the way for more lasting peace.
Sources close to Hamas say the group seeks assurances that the U.S.-backed truce will lead to a permanent resolution. Trump also suggested the Abraham Accords — peace agreements between Israel and some Gulf states — might expand to include additional countries.
Oil Markets Remain Steady Ahead of OPEC+ Meeting
Oil prices held mostly steady in light trading ahead of the weekend OPEC+ meeting, where another production increase is widely expected. Brent crude futures dipped 0.1% to $68.75 a barrel, while U.S. West Texas Intermediate crude rose 0.1% to $67.05.
Both contracts have rebounded between 1% and 2% this week after steep declines last week. OPEC+ is expected to boost output by 411,000 barrels per day in August, continuing the gradual rollback of production cuts enacted over the past two years to address prolonged low prices.
U.S. and Iran Prepare to Resume Nuclear Talks
Separately, Axios reported that the U.S. plans to meet with Iran next week to restart nuclear negotiations. Iran’s Foreign Minister Abbas Araqchi reaffirmed Tehran’s commitment to the Nuclear Non-Proliferation Treaty.