The Independence Day holiday-shortened trading week saw the S&P 500 (Index: SPX) power higher to reach new record highs throughout the trading week. Overall, the index rose 1.7% over its preceding week's close to end the week at 6,279.40.

Several market-moving news events combined to produce this positive result for S&P 500 investors. On Monday, weekend headlines that Canada pulled the plug on its digital services tax boosted U.S. tech stocks after President Trump had suspended trade talks with Canada because of the new tax.

After taking a proverbial 'breather' on Tuesday, Wednesday saw the announcement of a major trade deal with Vietnam, which pushed the market higher. Finally, Thursday saw a better-than-expected jobs report and also the U.S. Congress' passage of President Trump's tax bill, which avoids a massive tax increase from taking effect in 2026 because of the expiration of President Trump's 2017 tax cuts.

And that doesn't even include the noise around when and by how much the Federal Reserve will cut U.S. interest rates!

The latest update of the alternative futures chart shows the rising trajectory of the S&P 500 during the week that was.

Although the index' trajectory is overlapping the trajectory associated with investors focusing on the distant future quarter of 2026-Q2, we think based on the recent history of the index and the context provided by the week's market moving headlines that investors are still fixed on 2025-Q4 in setting current day stock prices.

By recent history, we observe that investors shifted their attention to 2025-Q4 several weeks ago, with the level of the S&P 500 consistently running to the underside of that alternative path by a small percentage. We think that's continued in this past week, mainly because nothing in the contemporary headlines points to any new information that would compel investors to shift their focus out to a more distant point of time in the future.

What the headlines of recent weeks do indicate is quite a lot of attention on how the Federal Reserve will be setting the U.S.' Federal Funds Rate through the rest of 2025, particularly with respect to how many rate cuts there will be in the fourth quarter.

Speaking of which, here are the week's market moving headlines:

Monday, 30 June 2025

• Signs and portents for the U.S. economy:
  • US narrows trade focus to secure deals before Trump's tariff deadline, FT reports
    • India to finalise interim trade deal with US as early as this week, FT reports
  • Canada scrapping tax on US tech firms after Trump suspends talks
    • US to restart trade negotiations with Canada immediately, White House says
  • Oil edges down on easing Middle East risks but gains for a second month
    • US crude oil output hit record in April, EIA data shows
• Fed minions called “too late” in not delivering interest rate cuts, don’t think the economy will experience stagflation:
  • Trump hammers Powell again as Bessent mulls Fed power transition timeline
  • White House says Trump wrote Powell to urge lower rates
  • Fed's Goolsbee sees no stagflation but 'definitely' things could get worse
• Growth signs, bigger stimulus developing in China:
  • China's factory activity returns to growth in June, Caixin PMI shows
  • China's weak factory activity maintains pressure for more stimulus as tariff risks weigh
• ECB minions worry about inflation, ready to stand by for action, getting ready to accept U.S. tariffs on Eurozone goods:
  • Euro zone facing increased inflation volatility, Lagarde says
  • ECB ready for 'forceful' action in world of inflation swings
  • EU to accept Trump's universal tariff but seeks key exemptions, Bloomberg News reports
• S&P tops 6,200 for the first time, Nasdaq seizes all-time high as trade deals progress
  • S&P 500, Nasdaq close at record highs, cap best quarter in over a year

Tuesday, 1 July 2025

• Signs and portents for the U.S. economy:
  • Trump says he won't extend July 9 trade deadline, expresses doubt on Japan deal
  • US job market surprises with increased openings in May
  • Oil settles up on signs of strong demand; investors await OPEC+ decision
• Fed minions signal they’ll think about cutting rates in July, but are still expected to wait until September:
  • Trump Gives Fed New Mandate
  • Powell signals openness to July US interest rate cut
  • Fed rate cut bets rise after Powell doesn't rule out July
    • Powell reiterates Fed will wait for more data before cutting rates
  • Fed hawks and doves: what US central bankers are saying
• ECB minions hit Eurozone inflation target, ready to pause interest rate cuts, thinking about devaluing Euro currency:
  • Eurozone inflation rises to ECB’s 2% target
  • ECB can afford to hold off on further rate changes for a while, Müller says
    • ECB more likely to wait until year-end to cut rates, Simkus says
  • ECB policymakers set pain threshold for euro rise in weak economy
• Wall Street's record-breaking rally takes a breather as S&P, Nasdaq end lower

Wednesday, 2 July 2025

• Signs and portents for the U.S. economy:
  • Trump says US has struck trade deal with Vietnam
  • Oil prices jump 3% as Iran suspends cooperation with UN nuclear watchdog
  • Oil, gas activity contracted in Q2 on higher US steel tariffs, Dallas Fed survey shows
• Fed minions still expected to resume cutting U.S. interest rates in September 2025:
  • US rate futures raise easing bets for July, fully prices in September cut
• Bigger trouble developing in China:
  • China's top leaders vow crackdown on price wars as deflation risks mount
    • China Communist Party magazine calls for crackdown on price wars
• BOJ minions thinking about pausing or not pausing Japan's interest rate hikes:
  • BOJ's Ueda says underlying inflation still below 2%
  • New BOJ board member warns against rushing into rate hikes
• ECB minions ambivalent on how many more rate cuts they'll deliver:
  • ECB should consider mildly supportive stance as on low growth, inflation, Wunsch says
• S&P 500, Nasdaq close up on Vietnam trade deal, tech stocks
  • Wall Street ends at a record high after U.S-Vietnam trade deal
  • Shares of health insurers fall sharply as patient care costs jump
  • US banks announce big shareholder payouts as Fed eases stress tests

Thursday, 3 July 2025

• Signs and portents for the U.S. economy:
  • US factory orders rebound in May on strong aircraft demand
  • US trade deficit widens in May on weak exports
  • Instant view: US job growth beats expectations in June
  • Oil prices ease on US tariff worries and expected OPEC+ output boost
  • Republicans muscle Trump's sweeping tax-cut and spending bill through Congress
    • In July 4 ceremony, Trump signs tax and spending bill into law
• Fed minions say they will have to wait up to a year to see if tariffs will cause inflation they predicted:
  • Fed's Bostic: Adjustment to Trump policies could take a year or more
• Bigger trouble, U.S. trade deal developing in China:
  • China's services activity growth hits 9-month low in June, shows Caixin PMI
  • US paves way to resume ethane exports to China amid trade truce
• BOJ minions split difference, will pause then resume hiking Japan's interest rates:
  • BOJ policymaker calls for resuming rate hikes after temporary pause
• ECB minions see some Eurozone economic growth, worry about not having enough inflation:
  • Euro zone services sector returned to modest growth in June, PMI shows
  • ECB's Wunsch: Inflation risk more downward than upward
• S&P 500 ends about 20 points shy of 6,300 level ahead of Independence Day holiday weekend
  • S&P 500, Nasdaq touch new peaks after strong labor data; Nvidia hits all-time high

The CME Group's FedWatch Tool projects the Fed will continue holding the Federal Funds Rate in a target range of 4.25-4.50% until its 17 September (2025-Q3) meeting, when it is expected to cut the rate by a quarter percent. Beyond that date, the FedWatch tool anticipates additional quarter point rate cuts on 10 December (2025-Q4) and on 28 January (2026-Q1), which is a little less aggressive than its projections from a week earlier, and is why we think 2025-Q4 is still the dominant focal point on investors' time horizon.

The Atlanta Fed's GDPNow tool projection of real GDP growth in the U.S. during the current quarter of 2025-Q2 dipped to +2.6% from the +2.9% level forecast the previous week.

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