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De-escalation in the Middle East and a return to new highs for equities has set a positive feeling as investors reach midyear. For the week, the S&P 500 Index was +3.5%, the Dow Jones Industrials +3.8%, and the NASDAQ +4.2%. The Communication Services, Technology, and Consumer Discretionary sectors led the S&P 500 Index for the week, while the Energy, Real Estate, and Consumer Staples sectors lagged. The 10-year U.S. Treasury note yield decreased to 4.284% at Friday’s close versus 4.381% the previous week.
The May Personal Consumption Expenditures (PCE) Price Index showed consumer prices +0.1% month-over-month and +2.3% year-over-year. Core PCE, excluding food and energy, was +0.2% month-over-month and +2.7% year-over-year. The PCE Price Index is an important data point since it is the index the Federal Reserve uses to measure inflation. Key economic data for the coming week includes the June Employment Situation Report which is scheduled for release on Thursday. Current CME Fed funds futures show 0.25% reductions in the Fed funds rate for the September, October and December meetings, with some Fed officials saying a reduction starting at the July meeting could also be appropriate.
Trade negotiations are on-going as several countries are nearing the July 9th deadline to complete trade agreements before previously announced tariffs going into effect. Trade negotiations and the U.S. reconciliation bill should occupy the news this week.
We close out the second quarter of the year with expectations for quarterly earnings growth for the S&P 500 Index at 5.0% year-over-year with revenue growth of 4.2%. Full-year 2025 S&P 500 Index earnings are expected to grow by 9.1% with revenue growth of 4.9%.
In our Dissecting Headlines section, we look at updates to trade negotiations.
Financial Market Update
Dissecting Headlines: Trade and Tariff Updates
Earlier in the month, Canadian PM Mark Carney said Canada and the U.S. were planning to get a trade deal done within 30-days. The deal looked to have blown up on Friday when Canada refused to budge on the digital service tax. The digital service tax was originally announced in 2020 to address the fact that many large technology companies operating in Canada may not otherwise pay tax on revenues generated from Canadians. Late Sunday, Canada announced it would rescind the digital services tax. Negotiations are expected to resume this week with the goal of reaching a trade deal by July 21st.
France’s finance minister said he is confident the European Union can secure a trade deal before the July 9th deadline. The E.U. is currently facing a 50% tariff on nearly all products exported to the U.S. if a deal is not completed. One key point of the negotiations is the EU agreeing to purchase energy, specifically liquified natural gas, from the U.S.
Trade talks with India are on-going with news that Indian officials have extended their stay in Washington, D.C. to secure a trade deal prior to July 9th.
The lower tariff of 10% on U.K. autos to the U.S. goes into effect today versus the prior tariff of 25%. The lower tariff was part of the UK-US trade deal announced on May 8th.
The outcome of trade deals and the U.S. reconciliation bill will set the stage for the second half economic outlook.
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Want a printable version of this report? Click here: NovaPoint Weekly June 30, 2025
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