Market Review: July 03, 2025
Closing Recap
On Thursday, July 03, 2025, U.S. stock markets continued their upward trajectory, buoyed by positive economic indicators. The DJ Industrials rose by 344.11 points (0.77%) to close at 44,828, the S&P 500 increased by 51.94 points (0.83%) to 6,279, the Nasdaq climbed 207.97 points (1.02%) to 20,601, and the Russell 2000 gained 22.66 points (1.02%) to finish at 2,249.
Market Drivers
The rally was driven by strong monthly nonfarm payrolls, which exceeded expectations, alongside a decline in unemployment rates. The ISM Services data and factory orders also indicated economic strength, enhancing investor sentiment. The labor market showed resilience, with tariff agreements emerging with countries like China and Vietnam, and inflation rates stabilizing over the past four months. Geopolitical tensions appeared to ease, contributing to a robust market environment.
Market Performance
Since the market pullback in April, the S&P 500 and Nasdaq have surged over 25%, reaching record highs, while the Dow is close to its own records. The financial and industrial sectors have led this rally, particularly in AI, data centers, and power sectors. As the 4th of July holiday approaches, the markets are poised for continued strength, with Bitcoin and gold prices also nearing their all-time highs.
Economic Indicators
Despite the strong headline jobs data, the private sector growth was the weakest since October 2024, with only 74,000 jobs added in the private sector out of a total of 147,000. The unemployment rate fell to 4.1%, surprising analysts who expected a rise. Treasury yields increased in response to the jobs report, reducing expectations for Federal Reserve rate cuts.
Trade Developments
In trade news, President Trump announced a new trade deal with Vietnam, imposing a 20% tariff on Vietnamese exports while eliminating tariffs on U.S. imports. Additionally, export license requirements for chip design software sales to China were lifted, signaling progress in U.S.-China trade relations.
Investor Sentiment
Investor sentiment improved significantly, with the AAII weekly survey showing a bull-bear spread of +11.9, up from -5.2 the previous week. The NAAIM Exposure Index also surged, indicating increased bullish sentiment among investors.
Sector Highlights
Retail and Consumer
OLO announced its acquisition by Thoma Bravo for approximately $2 billion, while TRIP shares rose following news of activist investor interest.
Energy and Industrials
Shares in the energy sector reached 52-week highs, while homebuilder stocks faced pressure from rising Treasury yields.
Financials
The financial sector saw a 1% increase, with many stocks reaching new highs. Wolfe Research made several rating changes, downgrading PNC and upgrading HBAN and VLY based on their financial outlooks.
Technology
In the tech sector, companies like SNPS and CDNS saw stock increases after the lifting of export restrictions on EDA software to China. CRWD reached record highs following positive analyst ratings.
Conclusion
The U.S. stock market is experiencing a significant rally driven by strong economic indicators, improving investor sentiment, and favorable trade developments. As the 4th of July holiday approaches, the outlook remains optimistic, although caution is warranted given the mixed signals in the labor market and potential geopolitical risks.