Market Brief Why Stocks Keep Climbing Despite Trump’s Chaos

Today’s Top & Bottom Lines – July 2, 2025

Pre-Market Price Check

What’s Driving Stocks: Trade optimism lifts futures to record highs

Sideways action with selective strength. Futures are modestly higher Wednesday as the S&P 500 digests a breakout month and enters Q3 near all-time highs. Traders are watching for economic data catalysts that could confirm the market’s soft landing narrative.

Sector rotation is clear: tech is cooling after leading Q2, while banks, healthcare, and industrials are attracting fresh capital. The S&P 500 remains in a strong uptrend, and yesterday’s bounce off the 20-day moving average held cleanly. As long as that support holds, dips may continue to be bought.

Fed expectations Jerome Powell indicated that if it hadn’t been for the uncertainty attached to the tariffs, the FOMC would have already made cuts in interest rates.  Markets are still pricing in two cuts by year-end. The July meeting remains off the table, but September is still in play depending on labor data.

Today’s ADP jobs report and tomorrow’s Nonfarm Payrolls will set the tone for Fed policy and could inject volatility into Friday’s session ahead of the long weekend.

Stocks on the Move (Pre-Market)

• Tesla (TSLA) +1.3% pre-market ahead of Q2 delivery results (~386k est). A surprise beat could break the stock out of its consolidation pattern.
• Apple (AAPL) +0.8% after a Jefferies upgrade to Buy, citing AI monetization in 2025–2026.
• Centene (CNC) -27% after withdrawing earnings guidance due to healthcare cost volatility.
• JPMorgan (JPM), Bank of America (BAC), Wells Fargo (WFC) all higher pre-market after announcing dividend hikes following Fed stress test results.
• Verint Systems (VRNT) +12% after reports of takeover interest from Thoma Bravo.

What to Watch Today:

Tariffs in focus as Trump’s July 9 trade deadline looms. For now, markets are treating the noise as non-event risk—VIX remains anchored and the dollar is steady.

Oil is stabilizing around $66 as supply/demand concerns and Middle East headlines cancel each other out.

Bitcoin surges above $107K, benefiting from macro hedge demand and early Q3 risk-on sentiment.

Upgrades & Downgrades

• Apple (AAPL) upgraded to Buy at Jefferies; PT $250.
• Nike (NKE) downgraded to Neutral at Citi after weak earnings and guidance.
• Verint (VRNT) receives multiple price target increases amid buyout buzz.
• D-Wave Quantum (QBTS) initiated with a “Strong Buy” by analysts at Cantor Fitzgerald on Wednesday morning.

Today’s Bottom Line:

Investors are waiting for Congress to get out of the market’s way by passing the President’s budget bill. But last night, it became clear the House is willing to make changes to the Senate version, meaning the President’s self-imposed July 4 deadline may slip.

Tensions rose further after two key developments late Tuesday:

1. While aboard Air Force One, President Trump said he’s narrowed down two or three finalists to replace Fed Chair Jay Powell, whom he again referred to as “a moron.” The last time Trump floated replacing Powell, markets sold off sharply.
2. On trade, the President said he does not plan to extend the July 9 deadline for reaching new deals. He specifically called out Japan—one of the largest U.S. trade partners—as refusing to engage with the White House.

Investors hate uncertainty, and it appears the President is preparing to unleash another wave of it after the passage of his "Big Beautiful Bill."

This is one of the strongest Wall of Worry trades I’ve seen in my 30+ years in the business.

Right now, investors seem focused on one thing: getting to earnings season. That’s where we’ll get the real test of whether high stock prices following the April meltdown are justified.

Expect continued bullish activity into earnings as investors rush to stay off the sidelines.

• The bulls are buying: Banks (KBE), Large-Cap Tech (QQQ), and Insurance (KIE)
• The bears are selling: Energy (XLE), Retail (XRT), and Homebuilders (XHB)