Stock Market Today: Another Quarter, More Mixed Price Action
It’s the most bullish day of the year, according to data compiled by one technical analyst. Still, all three major U.S. equity indexes opened lower to start the third quarter and the second half of 2025 after two of them closed the second quarter and the first half at record highs.
The fate of President Donald Trump’s Big Beautiful Bill and fiscal policy tops tariffs and trade policy as the main narrative for the moment, with significant effects across multiple sectors.
Vice President J.D. Vance broke a 50-50 tie in the Senate shortly after noon, a vote that sends the president’s signature legislation back to the House of Representatives ahead of a Trump-declared Fourth of July deadline.
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The Dow Jones Industrial Average surged well into the green early and held its gains due to strength in health care and materials stocks, while technology and communication services stocks weighed on the S&P 500 and the Nasdaq Composite.
“No other day of the year exhibits this amount of across-the-board strength,” writes Stock Trader’s Almanac Editor Jeffrey Hirsch, “which supports the case for declaring the first trading day of July the most consistently bullish day of the year over the past 21 years.”
UnitedHealth Group (UNH, +4.5%), Amgen (AMGN, +4.1%) and Sherwin-Williams (SHW, +3.5%) led Dow Jones stocks to the upside. Nvidia (NVDA, -3.0%) was No. 30 but is still trending toward a $4 trillion market capitalization.
Meta Platforms (META, -2.6%) and Netflix (NFLX, -3.4%) also posted big declines to open the third quarter.
Mr. Powell goes to Sintra
“Wherever you go, there you are” is Ralph Waldo Emerson’s famous reduction of the concept of travel. And so it is for Fed Chair Jerome Powell, who stuck to his lines about tariffs and inflation in Portugal Tuesday.
Speaking at a European Central Bank forum, Chair Powell said the Fed will continue to monitor the impact of tariffs on prices and growth.
“We’re simply taking some time,” Powell said. “As long as the U.S. economy is in solid shape, we think the prudent thing to do is wait and learn more and see what those effects might be.”
Recent incoming data broadly suggest inflation is cooling, though the Fed’s preferred gauge – the Personal Consumption Expenditures Price Index (PCE) – came in a little hotter than expected in May.
“I think that’s right,” Powell said when asked during a panel discussion whether the Fed would have cut interest rates by now but for Trump’s tariffs.
“In effect,” he explained, “we went on hold when we saw the size of the tariffs and essentially all inflation forecasts for the United States went up materially as a consequence of the tariffs.”
Still, price action in the federal funds futures market indicates investors, traders and speculators expect the Fed to cut two times for a total of 50 basis points between now and December.
The ISM Manufacturing PMI edged up in June, though it remains in contraction territory, and construction spending fell in May for a seventh consecutive month.
At the same time, job openings were stronger than expected in May and have held steady since mid-2024.
We now look to Jobs Thursday this holiday-shortened week for fresh insight into the other half of the Fed’s dual mandate and a labor market that’s showing signs of both weakness and resilience.
The bottom line, according to BMO Capital Markets Senior Economist Jennifer Lee, is we “need some clarity on tariffs… certainty on what the tariff rates will be and what they will cover.”
Uncertainty, Lee writes, is “putting the brakes on business planning.” The economist expects the Fed “to stay on hold this summer (certainly in July),” but to make its next cut after Labor Day.
Note that the U.S. stock market will close at 1 pm and the bond market will close at 2 pm Thursday. Both the stock market and the bond market are closed Friday in the U.S. in observance of Independence Day.
What Warren Buffett is buying
The yield on the 10-year U.S. Treasury note dipped ticked up from 4.226% Monday to 4.248% Tuesday, though the key benchmark continues to trend lower.
Indeed, yields across the Treasury maturity spectrum are coming down ahead of expected Fed rate cuts.
And one of the world’s most famous investors has been buying shorter-term U.S. Treasury bills, doubling his holdings, according to data compiled by JPMorgan Chase (JPM).
In fact, Warren Buffett and Berkshire Hathaway (BRK.B) now hold nearly $350 billion in T-bills – more than the Fed has on its balance sheet.
Invest with the Oracle of Omaha? It’s probably easier than you think. Here’s how to buy Treasury bills.
By the closing bell, the Dow Jones Industrial Average had gained 0.9% to 44,494, though the S&P 500 had lost 0.1% to 6,198 and the Nasdaq Composite was off 0.8% at 20,202.
Trump vs Musk
Trump continues to take shots at Powell, whom he nominated for Fed chair during his first administration. The president is also pursuing a fresh feud with another he once held close, Tesla (TSLA, -5.3%) CEO Elon Musk.
The erstwhile DOGE administrator opposes Trump’s Big Beautiful Bill as a waste of taxpayer money. And he’s triggered a response from the president, with potential impact on TSLA’s share price incoming.
“Elon may get more subsidy than any human being in history, by far,” Trump posted on Truth Social, “and without subsidies, Elon would probably have to close up shop and head back home to South Africa.”
What Dan Ives describes as a “best friends forever” situation “has now turned into a soap opera that remains an overhang on Tesla’s stock, with investors fearing that the Trump administration will be more hawkish and show scrutiny around Musk-related U.S. government spending.”
The Wedbush analyst and longtime TSLA bull notes specifically potential drags for Tesla and SpaceX, “and most importantly the autonomous future with the regulatory environment key to the future of robotaxis and cybercabs.”
Still, Ives concludes, “At the end of the day Musk needs Trump and Trump needs Musk given the AI arms race going on between the U.S. and China.”
The analyst reiterated his Outperform (Buy) rating and his $500 12-month target price for TSLA stock.
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