U.S. equity markets closed the holiday-shortened week on a high note, with the S&P 500 and Nasdaq Composite hitting fresh record highs. Despite this optimism in the U.S., European markets showed caution as doubts linger over America’s assertive trade policies.
U.S. Stocks Rally on Strong Jobs Data and Policy Progress
The S&P 500 and tech-heavy Nasdaq both closed at all-time highs on Thursday, buoyed by a robust jobs report that exceeded expectations. This positive employment data reduced market fears that the Federal Reserve would cut interest rates imminently. The S&P 500 climbed 0.8%, the Nasdaq gained 1.0%, and the Dow Jones Industrial Average rose 0.7%, approaching its own record territory. U.S. markets were closed Friday in observance of Independence Day.
June’s jobs report revealed a solid addition of jobs, although private sector hiring slowed to its lowest pace in eight months. The unemployment rate dipped slightly to 4.1%, partly because more workers exited the labor force, while shorter average workweeks suggested some cutbacks in hours.
Overall, the labor market’s strength combined with moderate inflation has led investors to expect the Federal Reserve will hold steady on interest rates at its upcoming meeting on July 29-30.
Nvidia Surges Toward Historic Valuation
Nvidia, the leading manufacturer of advanced AI chips, saw its market value surge toward an eye-popping $4 trillion, setting it on track to become the most valuable company ever. The company is at the center of the AI boom that continues to captivate investors.
Congressional Approval for Trump’s Major Policy Bill
The U.S. House of Representatives passed a sweeping tax and spending package championed by President Trump, marking a legislative win despite some opposition within his own party. This bill, which extends tax cuts from 2017 and increases spending on defense and border security, is expected to be signed into law by Trump soon.
Proponents say the legislation will drive economic growth, with Trump describing it as a “rocket ship” for the U.S. economy. Critics, including some Republicans, worry about the bill’s impact on the national debt, which the Congressional Budget Office estimates will increase by over $3 trillion. The bill also includes cuts to key food assistance and healthcare programs and rolls back certain clean energy tax credits. The White House disputes these fiscal impact estimates.
Trade Tensions Cast Shadow Ahead of Tariff Deadline
Despite the upbeat economic news and legislative progress, markets remain unsettled over the looming expiration of a pause on sweeping U.S. tariffs next week. The administration initially promised a series of individual trade deals but has only secured agreements with China, the UK, and Vietnam so far.
President Trump indicated a shift in strategy, announcing that letters would be sent to trading partners detailing specific tariffs on their exports starting Friday. He acknowledged the difficulty of negotiating with roughly 170 countries, signaling a possible tougher stance ahead.
Middle East Ceasefire Talks and Diplomatic Moves
In other developments, President Trump said a decision from Hamas on a potential ceasefire with Israel could come within 24 hours. The conflict between Israel and Hamas escalated in October 2023, and Israel has recently agreed to a 60-day ceasefire framework that could pave the way for more permanent peace.
Sources close to Hamas say the group is seeking assurances that the U.S.-backed truce will lead to lasting peace. Trump also hinted that the Abraham Accords, the peace agreements between Israel and some Gulf states, might expand to include additional countries.
Oil Markets Steady Ahead of OPEC+ Meeting
Oil prices remained largely unchanged in thin trading ahead of the weekend’s OPEC+ meeting, where another increase in production is widely expected. Brent crude futures slipped 0.1% to $68.75 a barrel, while U.S. West Texas Intermediate rose 0.1% to $67.05.
Both contracts have recovered between 1% and 2% this week after steep losses last week. OPEC+ is anticipated to raise production by 411,000 barrels per day in August, continuing a trend of easing cuts that had been in place for two years, partly to counteract the effects of prolonged low oil prices.
U.S.-Iran Nuclear Talks Could Resume Soon
Separately, Axios reported that the U.S. plans to meet with Iran next week to revive nuclear negotiations. Iran’s Foreign Minister Abbas Araqchi reiterated Tehran’s commitment to the Nuclear Non-Proliferation Treaty.
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