Week in Review: June 27, 2025

June 30, 2025

Recap & Commentary

Markets ended the week higher with both the S&P 500 and NASDAQ closing at new record highs. Concerns about the US becoming involved in a protracted military campaign against Iran ebbed as Iran failed to retaliate in any meaningful way following the US’s attack on Iran’s nuclear facilities. A cease fire between Iran and Israel that has largely held also gave investors some additional relief.

With markets at new highs, investors are once again faced with old questions.   After rebounding 24% from it’s April lows, S&P 500 valuations are again extended leaving investors to wonder what might propel the index higher. Optimists point to the likely passage of President Trump’s One Big Beautiful Bill, that would cut spending and make prior tax cuts permanent, as well as the possibility of additional Fed rate cuts in the second half of the year. More cautious investors worry the effects of higher tariffs have yet to be fully felt and when they are could lead to higher inflation and a broader economic slowdown.

Trade will likely move back to the forefront this week and next as July 9 nears. That is the date when Trumps 90-day pause on tariffs is set to expire. Over the weekend Trump said he is not inclined to extend the pause for most countries.  He also said the US was stopping trade talks with Canada following the country’s implementation of a digital services tax on technology companies that Trump described as a “blatant attack” on the US. In response, Canada said it was rescinding the tax as the two countries look to finalize a trade deal.

Economic Commentary

Core personal consumption expenditures (PCE), the Fed’s preferred measure of inflation, rose 0.2% in May and 2.7% from a year ago. Both readings were 0.1% higher than expected and 0.1% faster than the pace recorded in April. Economists continue to expect inflation to accelerate in the coming months as inventory purchased prior to the April tariffs is consumed and higher priced inventory purchased after tariffs is sold.

US economic activity slowed slightly in June, according to industry group S&P Global, as the pace of manufacturing activity was unchanged from May and services activity slowed slightly. Input prices in both sectors continued to reflect the effects of tariffs as manufacturing prices rose to their highest level in three years. Service sector input prices continued to rise quickly but at a slightly slower pace than in May. One bright spot was employment which rose in manufacturing to a one-year high while services reached a five-month high.

Housing data remained choppy with new home sales plunging nearly 14% to a 7-month low. Despite the slower sales, the median price increased 3% from a year ago to $426.6. Existing home sales were rose less than 1% to an annualized pace of 4.03M, marking the slowest pace of sales in May since 2009. The median price rose 1.3% from a year ago to $427.8K

Consumer spending fell 0.1% in May, the first decline since May, weighed down by a nearly 50% decline in motor vehicle sales following a spike in March and April as consumers rushed to purchase cars before tariffs took effect.

Of Note

On Sunday, the Senate began debating its version of President Trump One Big Beautiful Bill, with the aim of approving it on Monday. President Trump hopes to sign the legislation into law by July 4.

Market Indices (As of 06/27/2025)

• June Employment Report
• ISM Manufacturing
• ISM Services
• JOLTs Report
• Initial Jobless Claims