July 3rd, 2025
Markets posted strong gains in a holiday-shortened session following a better-than-expected U.S. jobs report for June. Canadian equities were also higher, though more modestly, rising.
The S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) notched record highs for the third time this week, rising around 0.8% and 1%, respectively. The Dow Jones Industrial Average (^DJI) climbed more than 0.7%, putting its own record close within striking distance.
Economic Takeaways:
- The House of Representatives is rapidly approaching a final vote on the One Big Beautiful Bill Act (OBBA), a major piece of legislation. If approved, the bill will move to the president’s desk to be signed into law, meeting the Republicans’ self-imposed July 4 deadline.
- In response to the data, traders are dialing back expectations for Federal Reserve rate cuts this year—now pricing in 51 basis points of easing, down from 65 basis points at yesterday’s close. This recalibration is fueling a broader sell-off in Treasuries, with the 2-year yield climbing 9 basis points and the 10-year up 5 basis points.
- The trade-weighted U.S. dollar also moved higher.
- Top of FormBottom of FormTop of FormThe economy added more jobs than anticipated in June, and the unemployment rate edged lower. Headline figures came in stronger than expected, giving markets a boost and lifting investor sentiment. The economy added 147,000 jobs in June, surpassing both the 110,000 forecast and May’s revised 144,000. The unemployment rate dipped to 4.1%, defying expectations for a rise to 4.3% and marking a shift after hovering between 4% and 4.2% since May 2024.
- Both the S&P 500 index and Nasdaq Composite reached record highs on Wednesday.
- Bitcoin (/BTC) traded mostly flat in the premarket after a 3.5% gain on Wednesday. Crypto-related names bounced back, with Coinbase (COIN) and MicroStrategy (MSTR) both higher after sharp losses yesterday, though Circle Internet Group (CRCL) dropped 8.18%.
- Trump’s ongoing feud with Federal Reserve Chair Jerome Powell—fueled by reports he may announce a replacement ahead of schedule—has added to market optimism over potential rate cuts. In a social media post late Wednesday, the president escalated the pressure, declaring that Powell “should resign immediately.”
- Gasoline prices hovered at their lowest level since 2021 heading into the July Fourth holiday.
Fed July Rate Cut ‘Now Completely Off the Table’ After Strong Jobs ReportYahoo Finance’s Jennifer Schonberger reports:
The chances of a rate cut at the Federal Reserve’s upcoming meeting have vanished after a strong June jobs report eased worries about a slowing U.S. economy.
“You are not getting a July rate cut — that is now completely off the table,” Joe Brusuelas, RSM chief economist, told Yahoo Finance.
Traders share this view. On Thursday morning, the probability of a Fed cut at the July 28-29 meeting dropped to nearly 5% from close to 25%, according to the CME FedWatch tool.
“The markets are speaking,” added Interactive Brokers chief strategist Steve Sosnick. He told Yahoo Finance that the likelihood of a Fed cut was “evaporating” in the wake of the latest labor market report from the Bureau of Labor.
June Jobs Report Shows Strength but Masked Weaknesses, Says Economist
The June payrolls report showed more jobs were added than expected, signaling a more resilient U.S. labor market at the end of the second quarter.
However, Indeed senior economist Cory Stahle cautioned that the report was “not stormproof” and “might not be as solid as it seems on the surface.”
Stahle pointed out that job gains were concentrated in just a few sectors, with healthcare and social assistance, along with state and local government employers, accounting for 94% of the total.
“The headline job gains and surprising dip in unemployment are undoubtedly good news, but for job seekers outside of healthcare & social assistance, local government, and public education, the gains will likely ring hollow,” Stahle wrote.
Outside those industries, employment growth has been “anemic at best,” he added, noting that the typical unemployed worker’s duration of joblessness continues to rise.
“There are real weaknesses in the market — including concentrated job gains, slowing wage growth, and falling participation — that have persisted for months, and there are scant signs of those concerns fading anytime soon,” he concluded.
On the Move
- Nvidia (NVDA) and other Magnificent Seven stocks remained under pressure in early trading today, continuing their slide following yesterday’s rotation out of big tech and communication services. Microsoft (MSFT) and Nvidia (NVDA) could both hit $4 trillion in market value this summer, Wedbush analyst Dan Ives believes. “We believe tech stocks will have a very strong second half of the year,” he said. “Our bullish view is that investors are still underestimating the tidal wave of growth on the horizon from the $2 trillion of spending over the next 3 years coming from enterprise and government spending around AI technology and use cases.”
- Tesla rose 4.73% on Tuesday, even after reporting a 14% year-over-year decline in quarterly vehicle deliveries—the second straight quarterly drop. The company delivered 384,122 vehicles, missing Wall Street estimates of just over 390,000 and down from 443,956 a year ago.
- Datadog (DDOG) surged 11% in premarket trading after announcing it will join the S&P 500 next Wednesday, replacing Juniper Networks, which was recently acquired by Hewlett Packard Enterprise (HPE).
- General Motors (GM) and Ford (F) gained 1.23% and 3.57%, respectively, despite U.S. auto sales slipping to a seasonally adjusted annual rate of 15.3 million units in June, down from 15.7 million in May.
What’s Ahead
Attention early next week is likely to shift quickly to Wednesday’s tariff extension deadline and the uncertainty that follows. The Trump administration has signaled it may grant extensions to countries engaged in good-faith negotiations, while warning that those it deems non-cooperative could face penalties.
Next week’s economic calendar is relatively light on data, but several key Treasury auctions and the release of Fed meeting minutes on Wednesday will draw attention. A 3-year auction kicks things off on Tuesday, followed by a 10-year auction on Wednesday. If demand for the new debt is weak, it could put upward pressure on yields.
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