Trade developments and continued momentum pushed all three major averages to modest gains again for a shortened holiday trading week. So while there is good news overall, uncertainty still lingers beneath the employment surface.
Outlook
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Investors are far less freaked out about tariffs than they were just three months ago, but they remain a sore subject. At the same time, most of us either know or have participated in, the roller-coaster ride of Tesla (TSLA) shares over the past several months.
Economically, the major implication is in the energy markets. Lower energy prices are a good thing for many countries and for the global economy. The utility industry needs power generation capabilities after all.
Once again, the decision to keep Fed Funds at its current level came as little surprise, as the Fed continues to be sitting back and waiting to see how the economic and inflation landscape unfolds given the uncertainties that have arisen from tariff-related developments.
Markets are strange animals: just when everything seems perfectly aligned for a particular outcome, they have a way of knocking you down. The upcoming week will be short but busy, packed with economic data and potential surprises.
Chair Powell has managed to stay on message about remaining cautious ahead of the potential effects of tariffs and resisted getting sucked into partisan politics. Since nothing he wrote or later said was particularly market-moving, equity traders could resume buying.
As autonomous vehicles and industrial robots converge under the banner of autonomous systems, investors should recognize robotics as the foundational layer of a new physical economy operating system.
Stocks fell last week as an up-and-down mix of trade progress and anxiety, economic news, and geopolitical tensions netted out. Beginning Friday morning, all three averages were under pressure all day following news of an escalated conflict in the Middle East. Oil prices pushed higher on Friday on supply concerns.
The effects of a rising TGA due to tax payments this week, increased repo usage heading into quarter-end, and higher overnight funding costs are likely to reduce overall market liquidity. This combination could make trading conditions challenging over the final two weeks of June, potentially placing significant downward pressure on stock prices.
Early in the week, markets notched steady gains as investors awaited key economic indicators and monitored ongoing trade discussions. Megacap tech names—particularly AI chipmakers—led the broader market higher, as sentiment stayed bullish on prospects for a U.S.-China trade deal.
Pricing power remains a growth lever, but volumes are showing strain. The new tariff regime is set to test the limits of pricing power further. Companies are still managing to push through price gains, but elasticity is no longer negligible. And tariffs threaten to raise input costs, squeezing margins.
When you take seven assets from various parts of the market, and six of them say one thing while one says something different, you wonder what that one asset knows that the others don’t.