Daily Market Report July 2nd, 2025
The first day of trading for the second half of the year looked like a return to the 1980’s as the old-time stocks that have done the worst this year – pharmaceuticals, retailers, casinos, builders and the rest of the weak items – all of a sudden caught fire and did well with the result that the Dow ended a strong day with a 400 point advance to 44,495 which left it within 1% of its all-time high. This was due to gains in AMGN, AXP, HD, HON, MCD, MRK, NKE, UNH and even AAPL which is starting to show pulse from low levels. It has now been higher for four straight days and seven out of the last eight.
Meanwhile the SPX dipped by 7 to 6198 as most technology stocks sold off sharply for its first loss in four days, and the Nasdaq really got blasted to the downside with a 167 point selloff to 20,202 as TSLA took a huge selloff in addition to the others. Meanwhile the lagging Russell 2000 made a rally of 22 points to 2197.
And after all of the turmoil, the VIX made a nominal gain up to 16.83.
TSLA hurt the market as the relationship between its CEO Elon Musk and the President went further downhill. Once close allies, the two have clashed recently, and Trump suggested there’s potentially “BIG MONEY TO BE SAVED” by scrutinizing subsidies, contracts or other government spending going to Musk’s companies.
Drops for several heroes of the artificial-intelligence frenzy also weighed on the market, as NVDA’s decline of 3% was the heaviest weight on the S&P.
But more stocks within the index rose than fell, led by several casino companies. They rallied following a report showing better-than-expected growth in overall gaming revenue in Macao, China’s casino hub. This helped LVS, WYNN and MGM.
Automakers outside of TSLA were also strong, with beaten-down GM and F showing good gains for a change.
Many of Trump’s stiff proposed taxes on imports are currently on pause, and they are scheduled to kick into effect at the end of next week. Depending on how big they are, they could hurt the economy and worsen inflation.
Washington is also making progress on proposed tax cut rates and other measures that could send the U.S. government’s debt spiraling higher, which could raise inflation.
In the bond market, Treasury yields swiveled following some mixed reports on the U.S. economy.
The May JOLTS report showed 7.7 million job openings than the month before and that economists expected. That could be an encouraging signal for a job market that had been appearing to settle into a low-hire, low-fire state.
Separate reports on U.S. manufacturing were more mixed. One from the Institute for Supply Management said U.S. manufacturing activity shrank again in June to 49, though not by as much as the month before.
A separate report from S&P Global suggested manufacturing production returned to growth at 52.9 in June after three months of declines.
The yield on the 10-year Treasury held at 4.24%, where it was late Monday, after bouncing from a modest loss to a modest gain earlier in the day.
The two-year Treasury yield, which more closely tracks expectations for what the Federal Reserve will do with its main interest rate, rose more sharply to 3.77% from 3.72%. Better-than-expected data on the economy could push the Fed to stay on pause with interest rates, after it halted its cuts to rates at the start of this year.
Fed Chair Jerome Powell said again that he wants to wait for more evidence about how Trump’s tariffs will affect the economy and inflation before resuming cuts to interest rates. That is despite Trump’s angry insistences lately that Powell and the Fed act more quickly to give the economy a boost through lower rates.
Earnings have: CNC lower
Economic reports will have: yesterday - May construction spending down by 0.3%, May JOLTS report came in higher at 7.7 million, ISM May Manufacturing Index was 49, SPX global manufacturing grew to 52.9; today – ADP report which came in lower, to -33,000 and we will see how this plays out tomorrow morning; Thursday – weekly jobless claims, May factory orders, June non-farms payroll reports for which the estimate is 110,00 and the unemployment rate is 4.3%. Job growth this year has averaged 123,800 compared to 191,900 the previous two years.
By Don Selkin