June 26th, 2025
The S&P 500 edged closer to a record high on Thursday, lifted by strong semiconductor sector gains following upbeat results from Micron. Investors also looked ahead to Nike’s earnings report and digested mixed signals from morning economic data, including GDP figures.
Stocks gained as optimism grew around potential interest rate cuts, and as former President Trump appeared to be narrowing in on a pick to replace Federal Reserve Chair Jerome Powell.
The Nasdaq Composite (^IXIC) climbed about 0.3%, while the S&P 500 (^GSPC) advanced roughly 0.4%, nearing its first record close since February. The Dow Jones Industrial Average (^DJI) also added 0.4%, or around 200 points. Nvidia (NVDA) rose slightly, extending gains after hitting a record high on Wednesday.
Overseas, European markets traded mixed after Germany’s consumer confidence came in below expectations. Asian markets also delivered a mixed performance overnight.
Economic Takeaways:
- The government’s final estimate for first-quarter gross domestic product (GDP) unexpectedly dropped to –0.5%, down from both the earlier –0.2% reading and consensus expectations.
- Volatility remained subdued, with the VIX falling another 0.3% Thursday morning after a 4% drop on Wednesday, staying below 17 and near early June lows—a potentially bullish signal for equities.
- Meanwhile, the U.S. Dollar Index slid to a three-year low below 98 amid rising expectations for rate cuts.
- As of early Thursday, markets priced in just under 25% chance of a rate cut in July, while odds of at least one cut by September reached nearly 90%. Futures suggest two to three cuts could be on the table by year-end.
- In the bond market, yields edged slightly lower to start the day. The 10-year Treasury yield opened around 4.26%, while the 2-year yield hovered near 3.74%.
A New Fed Chair
Trump is moving closer to announcing his choice to replace Federal Reserve Chair Jerome Powell, as his dissatisfaction with the current Fed chief intensifies.
Speaking to reporters Wednesday, the former president said, “I know within three or four people who I’m going to pick,” though he did not name names. Two sources familiar with the matter told Yahoo Finance that an announcement could come soon. According to those sources, potential candidates include former Fed governor Kevin Warsh, National Economic Council Director Kevin Hassett, Treasury Secretary Scott Bessent, former World Bank President David Malpass, and Fed Governor Christopher Waller.
The Wall Street Journal reported late Wednesday that Trump could reveal his decision as early as this summer or by September or October, potentially undermining Powell’s authority ahead of his term ending in May 2026. The Journal also cited the same list of candidates under consideration.
Steve Moore, a longtime adviser to Trump, told Yahoo Finance that the former president is eager to make the announcement and views it as a clear challenge to Powell. Moore confirmed that Warsh, Hassett, Bessent, and Malpass remain in contention, but said Waller is not being considered due to his vote to hold rates steady at the last Fed meeting.
Another source close to the administration suggested late September as a likely timeframe for the announcement, adding that while Bessent, Hassett, Waller, and Malpass are still being considered, Trump appears to be cooling on Warsh.
Tech Stocks Are Rallying—Again
After a steep slide, Big Tech has not only rebounded but surged, as investor enthusiasm roars back with key overhangs—trade tensions, Middle East uncertainty, and Federal Reserve policy—temporarily sidelined. The renewed optimism is palpable.
As DataTrek’s Nicholas Colas put it, “a bullish call on US large caps therefore requires believing that we can get to 1999-type valuations.”
That reference to 1999 evokes memories of the dot-com bubble’s peak exuberance, but Colas was quick to point out critical differences for today’s investors—even if the current market feels like it’s “partying like it’s 1999.”
Back then, the S&P 500 (^GSPC) traded at more than 24 times forward earnings estimates. Colas noted the index currently trades at 23 times this year’s earnings and 20.3 times next year’s consensus projections. To reach the kind of bullish targets floated recently—like BMO’s Brian Belski calling for a 10% gain from current levels—the valuation multiple could edge even higher. (Belski’s model shows a 24.4x ratio.)
While comparisons to the dot-com era may trigger bubble fears, there are compelling reasons for optimism—even with lingering risks. As Fed Chair Jerome Powell noted last week, the “US economy has defied all kinds of forecasts for it to weaken.”
Of course, not every tech bet will succeed. Some projections suggest many AI initiatives could fade over time, which is typical in any emerging tech cycle. But for the winners—whose names are already household staples—they continue to drive the S&P 500 higher.
Colas emphasized that today’s setup is fundamentally stronger than in 1999. Rate cuts are on the horizon, and the S&P has far greater exposure to profitable tech firms. The historical comparisons may be familiar, but the backdrop—along with the tech driving growth—is decidedly different.
Nvidia Stock Extends Rally as Analysts Predict AI ‘Golden Wave’
Nvidia (NVDA) continued its climb on Thursday, gaining 1.1% in early trading after hitting a fresh record above $154 on Wednesday.
The rally is fueled by increasingly bullish sentiment on Wall Street surrounding the AI chip market.
Loop Capital analyst Ananda Baruah raised his price target on Nvidia shares to $250 on Wednesday—the highest among analysts tracked by Yahoo Finance. The new target implies a potential $6 trillion market cap for the AI giant. Baruah projects the AI chip market will grow to $2 trillion by 2028.
Baruah wrote, “we are entering the next ‘Golden Wave’ of Gen AI adoption and NVDA is at the front-end of another material leg of stronger than anticipated demand.” He pointed to accelerating demand from governments, deep-pocketed tech “hyperscalers,” and Nvidia’s newly launched Blackwell AI chips as key drivers.
“While it may seem fantastic that NVDA fundamentals can continue to amplify from current levels, we remind folks that NVDA remains essentially a monopoly for critical tech, and that it has pricing (and margin) power,” he added.
Bank of America analyst Vivek Arya offered a similarly optimistic view, though with a more conservative outlook. In a note to investors Wednesday, Arya projected AI chip demand would grow from $201 billion in 2025 to $650 billion by 2030. He called Nvidia a “key beneficiary” and noted the company is “still far ahead” of emerging competitors in the sector.
On the Move
- Micron (MU) rose 2% in early trading, potentially lifting other semiconductor stocks if the momentum holds. The company impressed Wall Street with data center revenue that doubled, guidance that beat estimates, and a clear pivot toward AI. Several firms responded by raising their price targets.
- Nvidia (NVDA) added another 1.4% this morning, extending its rally after hitting a fresh all-time high Wednesday. Enthusiasm surrounding its shareholder event, upbeat coverage of its cloud business, and optimism around Micron’s results contributed to the gains. Loop Capital also lifted its price target on NVDA to $250 from $175.
- Alphabet (GOOGL) advanced 1% in early trade, building on a 2% gain from the previous session. Citi Research reiterated its Buy rating and raised financial forecasts, citing bullish sentiment following Alphabet’s presentation on YouTube advertising and AI initiatives at a major online ad conference in France, according to Barron’s. Meta Platforms (META) may have also benefited from the event.
- Tesla (TSLA) was flat in early trading after dropping nearly 3.8% Wednesday on weak May sales in Europe. Investors are now looking ahead to the company’s quarterly delivery report expected early next month.
- McCormick & Company (MKC) jumped 4.8% after beating earnings expectations and reaffirming its prior outlook, boosting investor confidence.
- Super Micro Computer (SMCI) gained another 1.7% pre-market, continuing a rebound that saw shares surge nearly 9% Wednesday following the pricing of a $2.2 billion convertible senior note offering.
- ASML (ASML) slipped 1.4% ahead of the open after Jefferies downgraded the stock to Hold from Buy.
- Acuity Brands (AYI) surged 6.8% following stronger-than-expected earnings, while Worthington Steel (WS) soared over 16% on robust quarterly results.
- PENN Entertainment (PENN) climbed 2.5% in pre-market trading after Citizens JMP upgraded the stock to Outperform, citing signs of improvement and multiple upcoming catalysts.
What’s Ahead
Nike (NKE) reports earnings after today’s close, marking a key moment for gauging consumer sentiment both domestically and internationally. The company’s significant presence in China is under scrutiny amid U.S. tariffs, while its U.S. operations may feel pressure from rising costs tied to imported goods.
Tomorrow we can look to the release of the Fed’s preferred inflation gauge—personal consumption expenditures (PCE)—for May. Expectations are for headline PCE to rise 0.1% month-over-month and 2.3% year-over-year, while core PCE (which excludes food and energy) is also expected to increase 0.1% for the month and 2.6% annually.
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