Week in Review: July 4 2025

July 9, 2025

Recap & Commentary

Markets ended the holiday-shortened week with the S&P 500 and NASDAQ closing at new record highs as markets anticipated the passage of President Trump’s One Big Beautiful Bill, and a better than expected June employment report helped assuage concerns of a slowing economy.

On Thursday, the House passed the Senate version of Trump’s One Big Beautiful Bill, paving the way for the President to sign it into law. The 900-page bill will make permanent the tax cuts from the 2017 Tax Cuts and Jobs Act, while providing additional spending for border security, defense and energy production, and increasing the debt limit by $5T. According to estimates from the Congressional Budget Office, the bill, which is partially funded by cuts to Medicaid and other assistance programs, could result in ~11.8M people losing health coverage under Medicaid over the next decade, while increasing the federal debt by $3.3T.

On Friday, President Trump announced the US will begin sending letters to various countries informing them that tariffs on their exports to the US will be as high as 70% beginning August 1. The administration expects a number of trade deals to be solidified before the deadline. For example, during the week, the US and Vietnam agreed to a trade deal lowering tariffs on Vietnamese exports to the US from 46% to 20% but will place a 40% transshipping tariff on goods originating from other countries but exported to the US via Vietnam. That tariff was largely seen as an attempt to prevent Chinese manufacturers from circumventing tariffs placed directly on Chinese exports.

Economic Commentary

June’s employment report surprised to the upside with nonfarm payrolls adding 147K new jobs, better than the 111K consensus forecast. Hiring was led by state governments and health care which added a collective 79K jobs. Unemployment fell 0.1% to 4.1%, leaving it range bound between 4.0% and 4.2% for the 14th consecutive month. In a separate report, job openings increased from 7.395M to 7.769M, increasing the ratio of jobs to unemployed individuals from 1.03 in April to 1.07 in May.

Economic activity as measured by industry group Institute for Supply Management (ISM) increased slightly in June though it remained tepid overall. Within manufacturing, employment and new orders contracted for a fifth consecutive month, while production rose to a four-month high. Prices remained significantly elevated reflecting the ongoing effects of tariffs. Within services employment contracted, falling to a three-month low, while new orders returned to growth after a one-month contraction in May. Prices slowed slightly, but remained at their second highest level since January 2023.

Weekly jobless claims fell 4K to 233K, a six-week low. Continuing jobless claims remained unchanged at 1.96M, the highest level since November 2021. The slow but steady increase in continuing claims over the past 2.5 years suggests individuals losing jobs are having an increasingly difficult time finding work.

Of Note

The Department of Education notified state education agencies on Monday that it would not release ~$7B in federal funding already approved by Congress. The funding helps states pay for after-school programs, summer programs, teacher training and other services. It is not clear if, or when, the funds will be released.

Market Indices (As of 07/04/2025)

• NFIB Small Business Optimism
• Initial Jobless Claims