Everything to Know about Macro and Markets
Stocks surged, with the S&P 500 (SPX) and the tech-heavy Nasdaq-100 (NDX) reaching new records, rising 3.44% and 4.20%, respectively, for the week. After bouncing roughly 24% and 30% in less than three months, these indexes have now officially clocked in a V-shaped recovery. Meanwhile, the Dow Jones Industrial Average (DJIA) ended the weekly session with a gain of 3.82%, bringing its recovery from April’s low to 19.7% and closing less than 3% below its all-time high.
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The Good, the Bad, and the OK
Stocks hit these milestones thanks to strong investor enthusiasm for tech shares, particularly those in the AI sector, and rising hopes for a Fed rate cut later this year. The White House’s announcement about signing a trade deal with China and the reveal of imminent plans to reach agreements with 10 major trading partners further jolted the markets. These developments overshadowed a dose of negativity from President Trump’s abrupt termination of trade talks with Canada over its proposed digital services tax.
The key obstacle resolved with China was the agreement over issues relating to the shipments of rare earth minerals. China controls over 60-80% of global supplies of rare earths, which are critically important to tech and industrial companies, especially those in the semiconductors, consumer electronics, EV, and defense sectors. The agreement has apparently removed a major chokepoint risk for U.S. tech and manufacturing firms, contributing to the rally.
Adding to investor optimism, Press Secretary Karoline Leavitt suggested that President Donald Trump could extend his 90-day reciprocal tariff pause beyond the deadline coming early next month, as the White House advances its global trade reshaping agenda.
Mixed Bag of Everything
Moreover, some good news also appeared on the macroeconomic front – particularly where it really matters for stocks – in forward-looking indicators. Although the Fed’s preferred inflation gauge – core PCE – showed that price increases accelerated in May, the June consumer sentiment index jumped to a four-month high, as inflation expectations of U.S. households significantly improved.
This mixed bag of data hasn’t simplified the Fed’s path to a rate-cut decision, with the governors seemingly in disagreement. Last week, Fed Chair Jerome Powell said he expects to see a pickup in inflation this summer and judged it best to continue with the “wait and see” approach. Conversely, his colleagues Michelle Bowman and Chris Waller said they now see the central bank cutting rates as soon as July. Despite the unexpected resilience, the economy continues to gradually decelerate, with expenditures displaying weakness and unemployment expected to increase.
U.S. consumers now appear to believe that their worst fears may not come to pass, as many of the trade uncertainties have already been taken off the table – and many more are apparently on their way to being solved. Meanwhile, Israel’s and America’s handling of Iran’s threat removed a notable source of potential danger that Middle East tensions could escalate to a whole new level – which could have grave global implications. As these risks subsided, oil prices dropped, and relieved stock-market participants went all-in on risk trades.
So Much for “Sell in May”
As risk trade returned, so did the obsession with the AI narrative. The poster child of AI mania, Nvidia (NVDA), has regained over $1.4 trillion since its April low, closing at another all-time high on Friday and reaching a $3.85 trillion market cap. This comeback helped Nvidia regain its position as the largest company in the world, snatching the title back from Microsoft (MSFT), which is now valued at $3.69 trillion.
However, the software and cloud behemoth – seen as the second most important pillar of the AI drive after Nvidia – has also done well. Microsoft reached a record high on Thursday, giving back some of the gains the next day due to profit-taking. Both companies, leading the largest technological advance since the Internet, are closing in on achieving a $4 trillion market cap milestone within months – if not weeks – if the stock market continues to rally even at a much more moderate pace than last week.
Meanwhile, some analysts warn that the reduced geopolitical and trade risks, coupled with the economy chugging along, don’t make the rally extension a done deal. With the Q2 earnings season just a couple of weeks away, stocks are facing a major test, as the rich valuations call for nothing less than spectacular earnings performances – and, even more important, outlooks. While the first looks an easy target, with the average Wall Street profit growth forecast for S&P 500 companies at below 3%, the second is a wild card – depending on future trade policy developments and incoming economic data.
With risk appetite back in full force, the market is heading into Q2 earnings with high expectations – and very little room for disappointment.
Stocks That Made the News
▣ Chip stocks led the gains this past week, with the S&P 500 Semiconductor & Semiconductor Equipment Industry index adding over 8.4%. Among the industry’s mega-caps, gains were led by Arista Networks (ANET), which surged by nearly 15% for the week despite a profit-taking-induced decline on Friday. Nvidia (NVDA) gained 10.7%, followed by Advanced Micro Devices (AMD) with a 10.4% increase. Taiwan Semiconductor Manufacturing (TSM) advanced 9.8%, and Broadcom (AVGO) added 8.4%.
▣ Uber (UBER) was another strong performer, climbing over 9.5% for the week, despite a decline on Friday. The stock’s rise was fueled by the launch of Uber’s autonomous ride-hailing service in Atlanta, in partnership with Alphabet’s (GOOGL) Waymo.
▣ Alphabet (GOOGL) also had a strong week, increasing 8.5% amid general market optimism and company-specific developments that prompted analyst upgrades. Notably, the rapid release of new AI tools, such as Gemini CLI, reinforced its status as an AI frontrunner. Additionally, the swift rollout of Google’s AI Overviews feature – now live in over 200 countries and available in more than 40 languages – is seen as a key driver of Google Search’s resilience and continued relevance in the AI era.
▣ Still, the biggest gainer in the S&P 500 last week was a non-tech name. Nike (NKE) soared over 20% after fiscal Q4 results came in better than feared and aligned with the company’s own cautious guidance. While the beat itself was encouraging, what really drove the rally – and a wave of analyst upgrades – was the unveiling of a clearer turnaround strategy focused on reigniting product innovation and brand relevance. Separately, Nike also announced steps to reduce its reliance on Chinese manufacturing, which was viewed as a strategic move to de-risk its supply chain and align with evolving geopolitical pressures.
Upcoming Earnings and Dividend Announcements
The Q1 2025 earnings season is over and the Q2 one will begin in mid-July, with no notable releases scheduled for this week.
Ex-dividend dates are coming this week for US Bancorp (USB), Mondelez International (MDLZ), Illinois Tool Works (ITW), Realty Income (O), State Street (STT), Comcast (CMCSA), Bristol-Myers Squibb (BMY), Cisco Systems (CSCO), JPMorgan Chase (JPM), and other dividend-paying firms.
For additional exclusive market insights and content from TipRanks Macro & Markets research analyst Yulia Vaiman, click here.