The Weekly Market Recap
Week of June 30 – July 4, 2025
A Record Setting Start to the Second Half
The first trading week of the second half sent a strong message: markets remain optimistic, even amid policy uncertainty. Significant changes in tax policy, IPO activity, and global trade have transformed the investment landscape and influenced a critical earnings season. Investors are now encountering a market where fundamentals and policies are aligned, making every earnings call critical.
Key developments included:
GOP Tax Bill Advances With High Income Cuts and Energy Shifts: Congress has moved forward with President Trump’s comprehensive tax and spending package, leading to significant changes to the U.S. economy. The new bill reduces taxes for high income earners, introduces new deductions for tips, and eliminates crucial subsidies for clean energy while increasing incentives for fossil fuels. Investors reacted positively to the bill's perceived focus on growth; however, there are ongoing concerns about long-term deficits and inflationary pressures.
Markets Start H2 on a High Note: Equity markets surged in the second half of the year, with both the S&P 500 and the Nasdaq achieving record highs. This rise was driven by optimism surrounding tax policies, strong government job growth, and robust consumer activity. A shift towards cyclical and value oriented sectors highlighted a market seeking stability in an increasingly policy driven landscape.
Dormant IPO Market Reawakens: The IPO market is showing renewed activity as Figma filed to go public, marking a major shift following the abandoned $20 billion acquisition by Adobe in late 2023. These moves are part of a trend among high growth companies looking to take advantage of improved market sentiment. Additionally, Circle's impressive performance after its IPO has further increased confidence, indicating that institutional interest in tech offerings is recovering.
US Finalized a New Trade Deal With Vietnam: The U.S. has reached a new trade agreement with Vietnam that imposes a 20% tariff on imports while seeking to achieve greater alignment in supply chains. Although this agreement is being presented as a strategic victory, industries such as apparel and semiconductors are now facing increased costs. Investors are closely monitoring the situation for potential retaliatory actions across Asia.
What To Consider
With record highs and fresh policy shifts shaping the market narrative, investors should brace for a more selective and responsive trading environment next week. As earnings season approaches and tariff policies remain uncertain, it will be essential to stay adaptable and forward thinking. Here are the key points that investors should consider:
Major financial companies will begin reporting their earnings next week, setting the tone for the upcoming reporting season. Analysts will closely examine not only revenue growth but also trends in profit margins, cost guidance, and the tone set by management, particularly concerning labor costs and the impact of tariffs. Key areas of focus will include credit quality, the cost of capital, and forward guidance, especially as long-term higher interest rates and stricter lending standards affect the broader economy.
The expiration of the 90 day tariff pause on July 9 may prompt renewed adjustments in the supply chain and impact corporate margins, particularly in the industrials, automotive, and retail sectors. Investors should pay attention to updates during earnings calls.
Trump's "Big Beautiful Bill" is not just a financial headline, it has the potential to reshape investment portfolios. We can expect ongoing adjustments in sectors affected by the removal of subsidies, such as clean energy and electric vehicles, while there may be growth opportunities in oil, gas, and high income consumer sectors benefiting from tax relief.
Last week’s strength in financials and industrials, combined with a slowdown in technology stocks, indicates that investors are shifting their focus to companies with stable cash flows and domestic exposure. It’s important to remain attentive to continued interest in boring but durable stocks, such as utilities, defense, and select consumer brands.