Fixed Income & Equities Markets Week in Review

Stocks continued to deliver healthy gains during this holiday-shortened week, as the 2nd quarter and 1st half came to a close on Monday. Notably, the Russell 2000 (small-cap oriented index) provided leadership during the week, and finally came positive for year-to-date performance. In addition, the S&P 500 and Nasdaq Composite both set new record high closes. As of Wednesday’s market close, the major indices are all in positive territory on a year-to-date basis: Dow Jones Industrial Average (Dow) +5.47%, S&P 500 +6.59%, Nasdaq Composite +5.98%, Russell Mid Cap +6.16%, and Russell 2000 +0.54%.

Trade policy news and headlines ramped up this week, ahead of the July 9th expiration of the 90-day pause for reciprocal tariffs. The European Union (EU) is reportedly close to accepting the 10% universal tariff but wants the US to agree to lower rates, quotas or exemptions on sectors such as pharmaceuticals, alcohol, semiconductors, commercial aircraft, automobiles, car parts, steel, and aluminum. Meanwhile, President Trump announced a trade agreement with Vietnam involving a 20% tariff on Vietnam exports to the US and a 40% tariff on goods deemed to be trans-shipped through the country. Vietnam agreed to drop all levies on US imports. Although numerous trade deals remain unsettled, there is speculation that more agreements may be inked as the July 9th deadline draws near. President Trump has not indicated whether there could be an extension of the deadline. However, he has suggested that multiple countries are likely to receive a letter setting out tariff levels if deals are not made by the end of the pause. Treasury Secretary Bessent also warned that “recalcitrant” countries could see tariffs revert to April 2nd levels and cautioned them to not drag out talks.

President Trump’s reconciliation bill (aka the “Big, Beautiful Bill” or BBB) made notable forward progress in Congress this week. The Senate debated the bill on Monday and then conducted a “vote-a-rama” on proposed amendments. The Senate passed its version of the $3.3 trillion bill on Tuesday after Republican leaders successfully persuaded enough remaining holdouts. The vote was 51-50, with Vice President Vance casting the tiebreaking vote. The package then moved back to the House. The bill seemed set to pass on Thursday, after House Speaker Johnson overcame resistance from conservative holdouts on Wednesday night. There has been much debate over several areas of the bill, including how much to increase of the debt ceiling, the Section 899 “revenge tax,” Medicaid spending cuts, the size of state and local tax (SALT) deductions, and the pace of phase-outs for clean-energy tax incentives, among other things. Assuming the House is able to pass the package, it will proceed to President Trump’s desk for his signature into law. He has been pressing for a target of July 4th. The equities market views the extension of the 2017 tax cuts in the package as a positive for stocks in the near term. However, there are longer-term concerns around debt and deficits as a potential overhang.

Due to the July 4th market closure on Friday, the all-important employment report came out a day early this month. On Thursday morning, the US Bureau of Labor Statistics reported the nation added 147,000 jobs in June, which beat the consensus expectation of 115,000. In addition, the prior two months were revised up by a combined 16,000. The unemployment rate ticked down 0.1 percentage points, to 4.1%. There were some mixed takeaways in the data underneath the headline metrics, but the equities market viewed the news as a positive and moved higher on the news. Nevertheless, this solid report reduces the odds of the Federal Reserve (Fed) cutting interest rates when it meets at the end of July.

As of July 2, 2025