Stocks kicked off the second half of 2025 by following through on last week’s record run as most major indexes closed this holiday shortened week at all-time highs. Central to the move was a backing up of what President Trump promised during his campaign which was to focus on economic growth. This came in the form of deregulation as well as the passage of a tax bill which cleared the Senate earlier this week and the House of Representatives toward the end.
· Stock market valuations do matter. However, they will most likely impact the stock market by limiting the upside rather than causing any meaningful pullback.
· Trump scores trade deal with Vietnam. Don’t be misled by the fact that the Trump Administration settled for a 20% tariff on Vietnamese goods entering the U.S., much lower than the 46% that it had levied in April as it contains a 40% tax on items shipped through Vietnam from other countries. The President has China squarely in his crosshairs as they are the country most guilty of this practice.
· Trade Deadline Set on April 9 “not critical.” According to White House Press Secretary Karoline Leavitt, the aforementioned trade deadline is “not critical.” Leavitt went on to add that “perhaps it could be extended, but that’s a decision for the president to make.”
· The bull market beat goes on. According to data from Bespoke Investment Group, the S&P 500 has risen 75.55% from its closing low set on October 12, 2022, without a 20% correction. The closest it has come was on April 8, 2025, when it closed 18.77% off its previous high set this past February 20. This brings the duration of this bull to 993 days, its fourth longest in forty years.
It’s The Economy…”
· Non-Farm Payrolls (approximately 80% of the U.S. workforce) rose by 147,000 during June, above the consensus estimate of 113,000. Payroll numbers for the prior two months were revised to 144,000 and 158,000, from 139,000 and 147,000 during May and April, for a net gain of 16,000. The rolling three-month average rose to 150,000 from 135,000. Private Sector companies added 68,000 jobs while the Public Sector added 79,000. This includes a 7,000 drop in federal government employment during April (-2.1% y/y) and 69,000 year-to-date. Payroll data was influenced by health care (39,000) along with leisure and hospitality (20,000). The Unemployment Rate fell to 4.1% from 4.2% during June when compared to May. The Unemployment Rate had gotten as low as 3.4% in April 2023. According to the household survey, employment rose by 96,000 as the labor force declined by 130,000. Average Hourly Earnings rose 0.22% or $0.08 to $36.30 during June from $36.22 one month prior and by $1.30 or 3.71% from $35.00 y/y. Average Weekly Earnings fell 0.07% or $0.89 to $1,241.46 during June from $1,242.35 during May. Average Weekly Earnings over the past year have risen by $40.96 or 3.41% from $1,200.50. The Average Duration of Unemployment rose to 23.0 weeks in June from 21.8 weeks in May, above the 19.3 weeks (SAAR) recorded one year ago. The number of Long-Term Unemployed (27 weeks or longer) rose 190,000 or 13.04% to 1,647,000 in June from 1,457,000 in May, above the level of 1,464,000 (SAAR) one year ago. Those unemployed less than 15 weeks totaled 61.7% of the unemployed while those unemployed 15 weeks and over totaled 38.3% as compared to 65.1% and 34.9% one month ago. (Source, U.S. Department of Labor)
· The Institute for Supply Management’s composite index of non-manufacturing (service) sector activity rose to 50.8% during June from 49.9% in May. Of note were New Orders (51.3% v 46.4%), Employment (47.2% v 50.7%), Backlog of Orders (42.4% v 43.4%) and Business Activity (54.2% v. 50.0%). The Prices Paid Component slipped to 67.5% during June from 68.7% during May. (Source, Institute for Supply Management)
· The Institute for Supply Management’s composite index of manufacturing sector activity rose to 49.0 during June compared to 48.5 in May. Generally, a reading above 50% indicates that the manufacturing economy is expanding, below indicates one in contraction. Of note were the changes in New Orders (46.4% v. 47.6%), Production (50.3% v. 45.4%), Supplier Deliveries (inverse, higher number indicates slower delivery times) (54.2% v. 56.1%), Inventories (49.2% v. 46.7%) and Employment (45.0% v. 46.8%). The Prices Paid Component rose to 69.7% during June from 69.4% during May.
Economic Reports scheduled to be released this week include the following: Tuesday, May Consumer Credit; on Wednesday, May Wholesale Inventories; and on Thursday, the Weekly Report of Initial Claims for Unemployment Benefits.
Several Companies of note are scheduled to report earnings this coming week. They include Helen of Troy (HELE), Progressive (PGR), Delta Air Lines (DAL), Conagra Brands (CAG), Levi Strauss (LEVI) and PriceSmart (PSMT).