Stocks got a boost as agreements with as many as a dozen trading partners are expected to be completed by President Donald Trump’s July 9 deadline, even as the White House appears to be falling short of the sweeping global trade reforms it promised.
On a tax policy front, Senate Majority Leader John Thune is rushing to meet Trump’s July 4 deadline for pushing through his massive tax-and-spending bill. Wind and solar stocks fell as the Senate’s latest version of the package looks to phase out key tax incentives for renewables projects more aggressively. Tesla Inc. fell for a fifth straight session as the bill also cuts electric-vehicle energy credits.
As the first half of the year comes to a close, a risk-on move that pushed the S&P 500 to its first record since February is showing few signs of abating. With two weeks to go before quarterly earnings results start rolling out, investors are focusing on economic data that remains resilient and signs that trade negotiations with major partners such as China and the European Union are making progress.
“The setup for stocks during the second half of 2025 is quite Goldilocks, with trade deals, the potential for an extension of the 2017 tax cuts, calmer geopolitical tensions and a Federal Reserve that is warming up to near-term interest rate cuts,” said Clark Bellin, president and chief investment officer of Bellwether Wealth. “The positive momentum can continue for some time, though investors should always be prepared for volatility.”
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Deutsche Bank pointed to the influence of share buybacks in driving recent stock-market gains, with S&P 500 repurchases expected to reach US$1.1 trillion ( this year on a gross basis. Morgan Stanley’s Michael Wilson said US stocks are likely to get a boost from Fed rate cuts as long as there isn’t a meaningful rise in the unemployment rate.
Meanwhile, JPMorgan strategist Mislav Matejka said US stocks could come under pressure if Fed rate cuts are accompanied by weaker economic growth. And legendary short-seller Jim Chanos warned that the AI ecosystem is getting close to a potential pullback.
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Among single-stock movers, Moderna Inc. rose after its experimental flu shot met its goal in a late-stage trial, clearing the path for its broader strategy of selling combination vaccines. Robinhood Markets Inc. rose 13% to reach a record after the trading platform said it launched tokenised US securities trading in Europe. And shares of US banks gained after the industry’s biggest names comfortably cleared the Fed’s annual stress test late Friday.
Hedge funds are also on a buying spree. Managers were net buyers of US equities for an eighth consecutive week, driven by long buys and to a lesser extent short covers. US long-short gross leverage saw the largest decrease since early April while net leverage — which is measured as long minus short positions — increased, suggesting hedge funds reduced their short exposure.
At least one group of investors is expected to sell US stocks. US pension funds are expected to sell about US$28 billion worth of equities into the June rebalancing execution on Monday. That ranks in the 89th percentile among all buy-and-sell estimates in absolute dollar value over the past three years, according to data compiled by Goldman Sachs.
