Record highs and trade triumphs
United States (US) stocks closed at record highs on Friday, driven by optimism over pending trade agreements and rising expectations for Federal Reserve (Fed) interest rate cuts. For the week, the US 500 (S&P 500) gained 3.44%, closing at a fresh record high, while the US Tech 100 (Nasdaq 100)gained 4.20%, also closing at a new record high. The Wall Street (Dow Jones) rose by 1612 points (+3.82%), still approximately 1250 points below its record high.
The rally on Friday night followed encouraging news of trade progress, as US Commerce Secretary Howard Lutnick announced that the US and China had finalised the trade framework reached earlier this month. He also indicated that the US administration is poised to finalise 10 additional trade agreements. Concerns over tariffs resurfaced shortly after, when President Trump announced the termination of all trade discussions with Canada following a disagreement over a digital services tax.
Economic data sends mixed signals
Turning to Friday night’s economic data; Personal Income at -0.4% month -on-month (MoM) from +0.4% prior and Personal Spending at -0.1% MoM from +0.1% prior unexpectedly declined, leading to minor downward revisions to gross domestic product (GDP) forecasts. Conversely, core personal consumption expenditures (PCE) inflation was stronger than expected, coming in at 2.7% versus the 2.6% forecast.
This week’s focus ahead of the 4 July long weekend:
- Job Openings and Labor Turnover Survey (JOLTS) Job Openings on Wednesday, 2 July
- Non-farm payrolls data set to be released on Thursday, 4 July (previewed below).
Legislative developments: OBBB and beyond
There will also be interest in the progress of President Trump’s One Big Beautiful Bill (OBBB), which cleared a key procedural hurdle in the Senate over the weekend with a 51-49 vote to advance the legislation for debate. Once the Senate passes its version, differences between the Senate and House bills must be reconciled before being sent to President Trump for his signature.
While the White House is pushing for a deadline of 4 July, it appears that an early August deadline is more realistic — primarily due to technical Senate objections (Medicaid cuts) and ongoing side negotiations on other critical components. Any further delays past early August could raise concerns about the debt ceiling, with the X-date currently thought to be in early September.