Wall Street was driven by trade deals and a surprisingly strong June jobs report this week. On Monday, the S&P 500 index topped 6,200 points for the first time ever, ending a tumultuous and turbulent first half of 2025 on a high with a 5.5% advance. Donald Trump announced a trade deal with Vietnam on Wednesday, driving the S&P to another high. On Thursday, the June payrolls reading came in significantly higher than anticipated, which helped the markets scale another peak.
The President has said he will not extend the current pause on reciprocal tariffs, which is set to expire on July 9, and will start sending letters to trading partners specifying the tariff rates they will have to pay.
For the week, the S&P climbed 1.7%, the Nasdaq added 1.6%, and the Dow surged 2.3%.
Future Wealth’s View
When tariff fears were at their worst in April, the S&P 500 was off as much as 17.8% for 2025. In April, the Nasdaq dropped by 23.4% year to date. Entering 2H of 2025, we believe the market is already looking ahead to economic conditions in 2026. By then, it is widely expected that tariff frictions may have eased, putting the U.S. and key trading partners on a friendlier footing. But, near term risks are real. Wall Street is expecting an across the board tariff of 10-15% with every country. Anything else, would mean a sell off in the markets.
Investors would be wise to pay attention to signals that suggest that there could be choppiness ahead. Homebuilding stocks have fared terribly so far in 2025 as interest rates have zigzagged. Inflation has cooled, but not enough to convince the Federal Reserve to cut short term rates to help boost the economy. A sharp ascent by gold this year and a decline in the value of the dollar suggests declining confidence in US equities and bonds.
When markets hit new highs, it behooves us to stay rooted on fundamentals and not randomly chase stocks that our neighbours cashed in to buy their million dollar homes or new Ferraris. In his book titled “Thinking Fast and Slow” – Nobel Laureate Daniel Kahneman states that “There is a puzzling limitation in our minds – our excessive confidence in what we know and our apparent inability to acknowledge the full extent of our ignorance and uncertainty of the world we live in.”
Wall Street has a way of humbling the very best.