S&P and Nasdaq Hit 2025 Highs as Consumer Sentiment Rises, but PCE and Fed Caution Signal Cloudy Skies Ahead/Try the Caccio e Pepe
June 30, 2025
Things you need to know.
- S&P and Nasdaq make a new 2025 high!
- U of Michigan consumer sentiment rises more than expected.
- PCE suggests caution ahead – Raffie Bostic says the skies remain cloudy.
- It’s the end of the quarter – Investors celebrate stock returns.
- Earnings season begins anew in 2 weeks.
- Try Caccio e Pepe.
And the surge continues….as investors, traders and algo’s can’t get enough – sending stocks right up and thru the prior all time high only to set a new all-time high – the S&P and the Nasdaq both piercing the old highs as the push continues…… The US economy continues to show signs of resilience – U of Michigan Consumer Sentiment rose more than expected coming in at 60.7 up 19% since Mid-May while Personal Income and Spending decline and the PCE Price Index continues to show signs of underlying inflationary pressures – not much but pressure just the same.
The dollar advanced, Gold and Oil declined, and bonds stalled.
The Dow gained 434 pts or 1%, the S&P up 32 pts or 0.5%, the Nasdaq +105 or 0.5%, the Russell up 1 pt, the Transports up 164 pts or 1.1%, the Equal Weight S&P up 28 pts or 0.4% while the Mag 7 added 305 pts or 1.1%.
Economic data showed the Personal Income fell 0.4% vs. the expectation of a rise of +0.3%, Spending down 0.1% vs. the expected +0.1% and the Core PCE m/m and y/y rose by 0.2% and 2.7% respectively – both a bit higher than the expectation while the 1 yr and 5 yr U of Michigan inflation expectations remain elevated at 5% and 4% respectively.
Even a negative tariff headline concerning Canada failed to slow the rally…. The headline? Trump terminated all trade talks with Canada after they imposed a digital services tax on the US that was supposed to take effect today. Trump defined this tax as ‘a direct and blatant attack on our country’. But over the weekend Prime Minister Mark Carney appeared to ‘see the error of his ways’ and on Sunday evening confirmed that he had an epiphany telling Trump on a late Sunday call that rescinded his plan to impose this tax and that he was anxious to resume negotiations and so Trump said “ok – let’s go”! This leaves July 21st as the target date for a trade deal with Canada.
Oil is down 15 cts at $65.37 – remaining in between the trendlines $64.59/$66.70. Gold is up $11 at $3,298 leaving it thrashing around between support at $3200 and resistance at $3,350 while Bonds remain unsure of what’s next. The 2 yr is now yielding 3.72%, 10 yr 4.25% and the 30 yr is at 4.81%.
Overnight Atlanta FED President Raffi Bostic took a cautious stance on what happens next at the FED. He made it clear that for him, a July cut is NOT an option and nor does he think the data will be ‘clear’ by then – this in direct contrast to Chrissy Waller, Mishy Bowman and Austan Goolsbee. So, the pressure is on…what happens next is anyone’s guess.
My gut says that we should NOT lower rates (right now), but I wonder if the pressure will get so strong that JJ throws in the towel – especially if Trump announces his pick for the next FED chair any day now. If JJ holds rates steady, he is sure to get tarred and feathered and if he cuts rates, it won’t be enough – You can have that job, I’m not interested! (Just in case my name was on the short list!).
Now also – don’t forget that it is the end of the month and the end of the quarter, so there has been lots of ‘window dressing’ as we move into the end of the marking period for portfolio managers and asset managers and unlike last quarter that saw markets in decline – Today we are at all-time highs and portfolios that were under pressure in March have more than recovered all of those losses….so this marking period will be a good one as investors open their ‘report cards’.
Tomorrow is July 1st and the start of the 3rd quarter! Earnings begin officially on Tuesday July 15th with the release of JPM and some of the other big banks…. Here is what the market is expecting.
Analysts estimate call for a +4.9% y/y earnings growth for S&P companies which would be the lowest since Q4 2023. This is a marked slowdown from the robust 11.3% growth in Q2 2024. Revenue growth is projected at +4.1% year-over-year, marking the 19th consecutive quarter of revenue growth for S&P 500. Markets are pricing in modest growth, but investor reactions may be cautious as usual due to mixed signals from forward guidance and macroeconomic factors like trade policies, geopolitical tensions, and Federal Reserve actions.
Positive earnings surprises will drive the stock price higher, while misses lead to sharper declines, as seen in Q3 2024 where firms missing earnings faced an average price drop of -2.9%.
Expectations have been tempered; 59 companies have forewarned and issued negative EPS guidance while 51 companies have raised their guidance. Analysts have taken growth estimates down (not uncommon) reflecting caution. On March 31st y/y EPS were expected to grow at 9.2% - today they are 4.9%.
Materials, Energy & Consumer Staples are expected to face challenges as a result of macroeconomic factors, policy changes and sector specific challenges. So, for instance - high input costs, supply chain disruptions, and reduced demand from construction and manufacturing could continue to weigh on profitability in the material sector. Energy could see pressure due to geopolitical tensions, and potential oversupply concerns (think OPEC + production decisions). A stronger U.S. dollar could also pressure global demand for energy exports. Consumer Staples could also see high input costs,
Information Technology, Financials, Health Care, Utilities and Consumer Discretionary are expected to drive positive performance,
Large banks are the first to report and will be the focal point for the start of the season. Major Banks like JPM, C, and WFC typically set the tone for the season, with their reports providing insights into economic health and interest rates, deposit volumes, and net interest margins. I am expecting loan demand to remain subdued due to high interest rates.
The MAG 7 results will be critical - NVDA, AAPL, MSFT, META, AMZN, TSLA & GOOG are in the bullseye given their market influence and that should surprise nobody.
Uncertainty around trade policies, interest rates, FED commentary global supply chain disruptions, and evolving monetary policy will continue to increase volatility.
And take a guess on what futures are doing? Dow futures are up 217 pts, S&P’s up 26, Nasdaq + 140 while the Russell is up 12. Now remember what we have been discussing – it is a holiday week – the 4th is this Friday and markets are closed…the vacation has already begun with many asset managers away from their desks starting last Thursday and continuing on Friday as they make their way to the beaches and mountains to celebrate America’s birthday. Less participants means exaggerated moves in either direction or I suspect that continues this week.
European markets are all slightly lower – down between 0.1% - 0.3% across the board.
The S&P closed at 6173 – up 32 pts making a new all-time high. The Nasdaq also made a new all-time high closing at 20,273 – up 105 pts. This morning looks like another risk on day as the excitement continues. Over the weekend – the Senate did vote to proceed on debating the Big Beautiful Bill but the current state of affairs leaves it in limbo…. The Senate is still actively debating and amending the bill, with significant changes expected due to objections from senators like Ron Johnson, Rand Paul, and Thom Tillis over provisions like the $5 trillion debt ceiling increase, Medicaid cuts, and insufficient spending reductions. The bill must pass the Senate and then return to the House for final approval of any changes – the target date is Friday – so the pressure is on….
It is the July 4th holiday next week – so expect volumes to decline as we move thru the week – but remember – lower volumes can lead to exaggerated moves in either direction….so stick to the plan.
Call me for a free (no obligation) portfolio analysis. 561-931-0190
Take good care,
Kp
Caccio E Pepe
Is a classic Roman pasta dish known for its simplicity and bold flavors, relying primarily on Pecorino Romano cheese, black pepper, Tears of the Gods and pasta.
It should take you no longer than 12 mins – once you boil the water.
You need: Fresh grated Pecorino Romano cheese, black pepper, spaghetti and the pasta water (tears of the Gods).
Bring a pot of salted water to a rolling boil – add the pasta.
While that is happening – heat up a sauté pan and toast the pepper. Add a ladle of the pasta water.
Next – take your grated Pecorino Cheese and add a ladle of the pasta water as well and mix to a creamy texture.
When the pasta is almost done – remove and place in the pan with the pepper – mix to coat and allow the pasta to suck up some of the water….Now turn the heat down and add the cheesey mixture and toss – coating all the spaghetti with the melted Pecorino. Serve immediately and enjoy. You can thank me later.
Buon Appetito
Source: Bloomberg, CNBC, Reuters, Wall Street Journal
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