Mid-Morning Look: July 02, 2025

On July 2, 2025, U.S. stock markets are experiencing a struggle for direction, with the S&P 500 and Nasdaq holding just below recent record highs. The Dow Jones Industrial Average is approximately 1% away from its December peak. This market behavior follows a significant surge in the previous week, but investors are reacting to a disappointing ADP private payroll report released earlier, which indicated a decline of 33,000 jobs in June, contrasting sharply with the expected increase of 97,000 jobs. This weak data has led to heightened expectations that the Federal Reserve may consider cutting interest rates sooner than anticipated, with futures indicating a 27.4% chance of a rate cut in July, up from about 20% before the report.

Market Overview

• DJ Industrials: -125.54 points (-0.28%) at 44,368
• S&P 500: +4.75 points (+0.08%) at 6,202
• Nasdaq: +92.69 points (+0.46%) at 20,296
• Russell 2000: +1.69 points (+0.08%) at 2,199

Key Developments

In stock news, managed care companies like Centene (CNC) faced declines after withdrawing their guidance for 2025, anticipating a significant negative revision to their ACA Marketplace results. Conversely, Tesla (TSLA) shares rose following positive Q2 delivery numbers. Additionally, large banks saw gains due to announced buybacks and dividend increases after stress tests.

Political and Economic Context

On the political front, President Trump’s OBBBA tax and spending bill narrowly passed the Senate, with Vice President Vance casting the deciding vote. The bill is expected to face a House vote soon but has encountered resistance from some Republican members. In trade news, Trump threatened to impose tariffs of up to 35% on Japan, casting doubt on the prospects of a trade deal.

International Markets

In Europe, volatility was noted as the yield on the 10-year UK government bond rose sharply, reflecting investor concerns following the UK government's decision to scale back benefit cuts. The British pound also experienced a decline amid these developments.

Sector Movements

Banking Sector

Several banks announced dividend increases and share buybacks following stress tests, including:

• American Express (AXP): Quarterly dividend raised by 17% to $0.82
• Bank of America (BAC): Quarterly dividend increased by 8% to $0.28
• Goldman Sachs (GS): Plans a 33% increase in common stock dividend to $4.00

Managed Care

Centene (CNC) shares plummeted by 38% after withdrawing its EPS guidance, leading to declines in other managed care stocks like Molina Healthcare (MOH) and Elevance Health (ELV).

Stock Gainers and Laggards

Gainers

• Apple (AAPL): +2% after an upgrade to Hold from Underperform
• Envirotech (ENVX): +11% following a share repurchase announcement
• Greenbrier (GBX): +16% after reporting better-than-expected earnings

Laggards

• Adobe (ADBE): -3% after a downgrade due to competitive pressures
• Centene (CNC): -38% following guidance withdrawal
• Vista Outdoor (OSCR): -14% after an underweight rating initiation

Conclusion

The market is currently navigating through mixed signals from economic data and corporate earnings, with significant movements in various sectors reflecting investor sentiment and expectations regarding future monetary policy.