US Stocks: S&P 500, Nasdaq close at record highs, cap best quarter in over a year
Both indexes ended the quarter with double-digit gains. The S&P 500 gained 10.57% during the period, the Nasdaq rose 17.75%, and the Dow climbed 4.98%. The Russell 2000 Small Cap index rose 8.28% in the quarter. Still, the three main indexes posted their weakest first-half performances since 2022, as the uncertainty around trade policy has kept investors wary during the year, with tensions peaking after President Donald Trump disclosed widespread tariffs on April 2.
Trade deals with China and the UK have fueled optimism that an all-out global trade war can be minimized, with hopes for more deals to be reached before Trump's July 9 trade deadline.
The end of the quarter was also influenced by managers tweaking their portfolios to look more attractive at quarter-end.
"Animal spirits seem to have taken hold here," said Roy Behren, co-president of Westchester Capital management fund. "It is also quite common for the last couple of days of a quarter to see strength because of the window dressing." On Sunday, Canada scrapped its digital services tax targeting U.S. tech firms, just hours before it was due to take effect, in a bid to advance stalled trade negotiations with the United States. But U.S. Treasury Secretary Scott Bessent warned on Monday that countries could still face sharply higher tariffs on July 9 even if they are negotiating in good faith, and any potential extensions will be up to Trump. Meanwhile, U.S. Senate Republicans will try to pass Trump's sweeping tax-cut and spending bill, despite divisions within the party about its expected $3.3 trillion hit to the $36.2 trillion national debt. Trump wants the bill passed before the July 4 Independence Day holiday.
Key economic data releases this week include monthly non-farm payrolls and the Institute for Supply Management's survey on manufacturing and services sectors for June.
Several U.S. central bank officials including Federal Reserve Chair Jerome Powell are scheduled to speak later this week.
A raft of soft economic data and expectations that Trump will replace Powell with someone dovish have pushed up bets of rate cuts from the Fed this year.
On Monday, nine of the 11 S&P indexes closed up. The Dow Jones Industrial Average rose 275.50 points, or 0.63%, to 44,094.77, the S&P 500 gained 31.88 points, or 0.52%, to 6,204.95 and the Nasdaq Composite gained 96.28 points, or 0.48%, to 20,369.73. Shares of big U.S. banks rose after most cleared the Federal Reserve's annual "stress test," paving the way for billions in stock buybacks and dividends.
Leading the S&P 500 were Hewlett Packard Enterprise, up 11.1 %, First Solar up 8.8 %,and Juniper Networks up 8.45 %.
"The current rally was driven by few heavyweight stocks that drove indexes up, giving the market a sense of optimism despite rising deficit and unresolved policy issues," said Cole Smead, CEO and portfolio manager of Smead Capital Management.
"The stock market doesn't seem to care at all, people think this party is going to go on forever," he said. "I think this game is over. It's just a matter of when and how bad it gets."
Volume on U.S. exchanges was 17.12 billion shares, compared with the 18.23 billion average for the full session over the last 20 trading days. (Reporting by Sabrina Valle in New York; Additional reporting by Sruthi Shankar and Nikhil Sharma in Bengaluru; Editing by Devika Syamnath and Matthew Lewis)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
UAE Moments
20 minutes ago
- UAE Moments
♏ Scorpio Daily Horoscope for July 2, 2025
Love Open communication is powerful now. If tensions linger, address them with honesty and compassion. New connections may emerge—perhaps from your past. Authenticity attracts depth. Finance Your strong analytical side gives you financial advantage today. Research before investing and think long-term. Careful planning will yield better results than quick decisions. Career A breakthrough could be on the horizon. You're sharp and focused—innovative ideas will get noticed. Channel your intensity into strategic action for best results. Health Balance is essential. Counter stress with physical activity like swimming, walking, or deep breathing. Use downtime to reset your mind. Personal Growth Embrace today's energy for transformation. A shift in routine or mindset could open new pathways. Reflect on how changes align with your long-term vision. Lucky Color & Numbers
UAE Moments
21 minutes ago
- UAE Moments
Trump Threatens to Deport Elon Musk as Their Feud Escalates
Things just got more intense between Donald Trump and Elon Musk. During a press event on Tuesday, the U.S. President hinted he might consider deporting Musk, the billionaire CEO of Tesla and SpaceX. 'I don't know, we'll have to take a look,' Trump said when asked directly, keeping things vague but serious. EV cuts may have sparked the fallout The tension appears to be over Trump's controversial 'Big Beautiful Bill,' which slashes subsidies for electric vehicles—a move that Musk has publicly criticized. Trump responded by saying Musk was 'very upset' over the loss of the EV mandate, warning that 'Elon can lose a lot more than that.' 'Doge is a monster that might eat Elon' In one of his more colorful threats, Trump suggested that Doge —the Department of Government Efficiency, formerly led by Musk—might be turned against the companies Musk runs. 'Doge is the monster that might have to go back and eat Elon,' Trump said. Musk had resigned from Doge in May after leading a high-profile crackdown on government spending. Musk replied on X (formerly Twitter), teasing escalation: 'So tempting to escalate this. So, so tempting. But I will refrain for now.' From biggest donor to public enemy? Musk was once a close Trump ally—his top donor in the last election—and even held a key advisory role. But the two had a very public falling out last month over the tax and spending bill, with most of the drama unfolding online.
Zawya
2 hours ago
- Zawya
Foreign investors increase dollar hedges on US stock portfolios
NEW YORK - Overseas asset managers and pensions are adding protection against a weakening dollar, concerned about the U.S. currency's diminishing ability to diversify their U.S. equity portfolios. Because such stock funds carry built-in dollar exposure, investors with other home currencies that had not neutralized the foreign exchange risk were cushioned when the dollar was strong if Wall Street performed badly. But the dollar's correlation with other U.S. assets, and the impact of its fall on portfolio performance, came into sharper focus when the Trump administration announced far-reaching global tariffs on April 2, sending U.S. stock indexes and the greenback sharply lower. The dollar hit a three-year low against a basket of currencies, raising risks for investors whose portfolios once benefited from the natural hedge. Now, managers are reducing dollar exposures and increasing the hedge ratios for U.S. stock portfolios where clients' investment policies allow them to do so. About 10% of Russell Investments pension fund clients in Europe and the UK have already increased hedge ratios on their international stock portfolios, said Van Luu, global head of solutions strategy for fixed income and foreign exchange for Russell in London. One client raised it to 75% from 50%, highlighting the desire to have a greater portion of U.S. stocks protected against the weakening dollar. "If what we're seeing persists... then you will have more clients taking action in that direction," said Luu. 'MORE HOSTILE' The dollar is down 10% for the year, and 6.5% since U.S. President Donald Trump's so-called Liberation Day in April. Meanwhile, the S&P 500, the benchmark U.S. stock index, has recovered 24% since an April slump and is up 5.3% this year, flirting with record highs. The MSCI gauge of global stocks, minus the U.S., has risen 16% for the year. "It's not enough to look at the stock market and say it is more or less back to where it was, so nothing happened," said Peter Vassallo, FX portfolio manager at BNP Paribas Asset Management, who manages currency exposures across its asset classes. BNP has been reducing dollar exposures for its clients that include pension funds, sovereign wealth funds and central banks. It has sold U.S. dollars across stock and fixed income portfolios, and built up what Vassallo described as a sizable position in options for funds that allow these strategies. He said the euro, yen and the Australian dollar are among the primary currencies it bought against the dollar, a big contrast to how the asset manager ended the previous year with a small "overweight" in the U.S. dollar. "This switch towards a more uncertain policy regime created an environment where we as market participants see the U.S. as more hostile to international capital flows, international trading," Vassallo said. After a June review, Justin Onuekwusi, chief investment officer at St. James's Place, said it is maintaining a strategic hedge that allows it to reduce overseas currency exposure in favor of the pound by up to 20%. The strategy "has been beneficial for our clients' returns year to date," he said. Onuekwusi said he now sees the dollar as closer to its longer-term fair value and has marginally reduced dollar hedging across managed portfolios. Foreign investors hold more than $30 trillion in U.S. securities, about $17 trillion of which is in equities and more than $12 trillion in long-term debt, according to data published in April by the U.S. Treasury Department. Marcus Fernandes, global head of currency management at Northern Trust, said the divergence in the correlation of risk is more than in the past. "That's why people are thinking faster than before, 'I need to increase my hedge ratio'," he said. "Once those conversations start, they usually end with increased hedge ratios," he said. COST INCENTIVE Data from Russell showed that a euro-hedged version of the MSCI USA index was flat for the year through May, while the euro-unhedged version was down 8.3%, showing the benefit of hedging for euro-based investors. The dollar is down 13% against the euro on concerns about flip-flopping U.S. trade policies and growth. "FX is back on the boardroom agenda," said Joe McKenna, head of fund solutions at MillTech, a London-based FX and cash management company. "What was once handled quietly in the back office is now drawing the attention of CIOs and CFOs, driven by renewed dollar volatility." Managers hedge currency exposure by selling the dollar against their respective base currency like the euro or the pound in the FX forwards market, and also use derivatives like options. When the dollar weakens, the hedge position gains in value while the dollar exposure on the underlying stock portfolio loses. Forward selling of the dollar is the largest in four years, according to John Velis, Americas macro strategist at BNY Markets, suggesting investors are unwilling to carry long dollar exposures, even with the potential for it to rally if U.S. tariff policy changes or the Israel-Iran conflict resumes. Investors reallocating to U.S. assets to meet benchmark weights after April's selloff are now hedging those exposures, he told Reuters. "It communicates that dollar volatility is a concern," said Velis. "It can be policy volatility as well as macroeconomic volatility that's causing people to... not keep that dollar exposure because of the fears of the dollar decline."
