S&P, Nasdaq notch record highs; tariff uncertainty looms - what’s moving markets
Investing.com - Two major U.S. stock average log fresh record closing highs to end a holiday-shortened trading week, although the buoyant mood fails to extend into Europe with uncertainty still swirling around an aggressive U.S. trade agenda. The U.S. Congress passes President Donald Trump’s giant policy bill, in a key legislative win that came despite some intraparty detractors. Trump also suggests Hamas could deliver its decision on a temporary ceasefire with Israel in the coming hours.
1. S&P 500, Nasdaq notch record closes
The benchmark S&P 500 and tech-heavy Nasdaq Composite both logged fresh all-time peaks on Thursday, as investors cheered a strong U.S. jobs report and shrugged off predictions that the Federal Reserve would now opt not to slash interest rates this month.
By the end of trading on the final day of a holiday-shortened week, the S&P 500 had climbed by 0.8% and the Nasdaq had advanced by 1.0%. The blue-chip Dow Jones Industrial Average also gained 0.7%, hovering within striking distance of its own record high. Stock markets in the U.S. will be shuttered on Friday for the Independence Day holiday.
Labor Department data showed that the U.S. added more roles than anticipated in June, although the numbers masked a slowdown in private hiring to an eight-month low. The unemployment also ticked down to 4.1%, but this was partly driven by more Americans choosing to leave the workforce, while a decline in the length of the average work week suggested that businesses may be ratcheting down hours.
Still, the figures underlined broad resilience in the labor market that, coupled with recently benign inflationary pressures, could persuade Fed policymakers to hold off on cutting borrowing costs at their next two-day gathering on July 29-30.
Meanwhile, in individual stocks, Nvidia (NASDAQ:NVDA)’s market capitalization surged to nearly $4 trillion. The designer of high-end artificial intelligence chips and focal point of a boom in enthusiasm around the nascent technology is now on pace to become the most valuable company in history.
2. Congress passes Trump’s signature policy bill
The House of Representatives approved the Senate’s version of President Trump’s massive tax-cuts and spending bill, as Republicans in the lower chamber won over party holdouts to overcome staunch Democratic opposition.
It marks a significant victory for Trump, who has invested much of his political capital into pushing the bill through Congress prior to a self-imposed July 4 deadline. Trump is now due to sign it into law at an event on Friday.
Trump has argued that the measures -- which included an extension to his 2017 tax cuts and other promised tax reductions as well as elevated spending on defense and border security -- will fuel economic growth. He told reporters that the bill would now put the U.S. on a "rocket ship."
But the bill’s detractors, including a handful of Republicans, have voiced concerns around its impact on the nation’s finances. Key food-assistance and health care programs would also be cut, and tax breaks for clean energy projects rolled back, to help offset the costs of the bill.
The Congressional Budget Office has estimated that it will add more than $3 trillion to the already sky-high U.S. debt pile and remove health coverage for millions of Americans. The White House has disputed the forecasts.
3. Trump to send out tariff letters
But, even with the unexpectedly solid labor market figures and Trump’s sprawling policy bill now in the rearview mirror, lingering uncertainty over U.S. tariffs has dampened what was an otherwise upbeat vibe heading into the Fourth of July weekend.
Attention is now turning to the upcoming expiration of a pause to sweeping "reciprocal" levies next week, with investors unclear over how Trump will approach the deadline.
Despite claims at the beginning of the 90-day delay that the Trump administration would pursue individual trade deals with dozens of countries, Washington has only revealed framework pacts with three nations: China, Britain and, earlier this week, Vietnam. Trump has suggested that a "couple" more could soon be revealed.
But the president has appeared to pivot away from the goal of securing a raft of these agreements, saying that he will start sending letters out to trading partners on Friday specifying what tariff rates they will incur on imported goods into the U.S.
He seemed to acknowledge the difficulty of negotiating trade deals with as many as 170 countries, saying "they’re very much more complicated."
4. Trump expects Hamas ceasefire decision in 24 hours
Elsewhere, Trump said it will be known in 24 hours if the Palestinian militant group Hamas has agreed to accept a ceasefire deal with Israel.
Both sides have been engaged in brutal fighting for decades, but the latest bout of violence began in October 2023 when Hamas attacked Israel.
Trump noted earlier this week that Israel had agreed to the conditions of a 60-day halt to hostilities that could open the door to a more permanent end to the war.
Citing a source close to Hamas, Reuters reported that the group was seeking guarantees that the U.S.-backed framework truce would lead to peace.
Meanwhile, Trump hinted that the Abraham Accords, a deal signed in his first term that aimed to normalize relations between Israel and some Gulf states, could be expanded. "I think a lot of people are going to be joining the Abraham Accords," he said.
5. Oil prices choppy
Crude prices hovered around the flatline in thin trading ahead of the weekend’s OPEC+ meeting, which is expected to result in an increase in production.
At 03:42 ET, Brent futures dropped 0.1% to $68.75 a barrel and U.S. West Texas Intermediate crude futures added 0.1% to $67.05 a barrel.
Both contracts were up between 1% to 2% this week, bouncing back from double-digit losses during the prior week.
The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, is expected to once again hike production by 411,000 barrels a day in August, at the weekend’s meeting, following similar hikes in the past three months.
The production hikes come as the OPEC+ scales back two years of sharp production cuts, in part to offset the economic impact of persistently low oil prices.
Elsewhere, U.S. news website Axios reported on Thursday that the U.S. was planning to meet with Iran next week to restart nuclear talk, while Iran Foreign Minister Abbas Araqchi said Tehran remains committed to the nuclear Non-Proliferation Treaty.
