U.S. stock markets surged on Thursday, June 26, bringing the S&P 500 and Nasdaq Composite tantalizingly close to their all-time highs, while the Dow Jones Industrial Average posted a robust gain of approximately 400 points. The rally, fueled by optimism over potential Federal Reserve interest rate cuts and easing trade deadline concerns, underscored a bullish sentiment among investors despite mixed economic signals.
Major Indexes Climb
The S&P 500 (^GSPC) rose 0.8%, closing at 6,141.02, just shy of its February record of 6,144.15. The Nasdaq Composite (^IXIC) advanced over 1%, narrowly missing its own record high, driven by strength in technology stocks, particularly AI chip leader Nvidia (NVDA), which gained 1% after hitting a record high the previous day. The Dow Jones Industrial Average (^DJI) climbed 0.9%, or roughly 400 points, reflecting broad-based market enthusiasm.
Market momentum was supported by growing expectations of a Federal Reserve rate cut, potentially as early as July. Investors are increasingly pricing in a 27% chance of a rate cut at the Fed’s next meeting, up from 12.5% a week ago, according to the CME FedWatch Tool. By September, the odds of a rate cut have surged to 92%, spurred by President Trump’s reported dissatisfaction with Federal Reserve Chair Jerome Powell’s cautious approach to monetary policy. Reports from *The Wall Street Journal* suggest Trump may announce a replacement for Powell in September or October, signaling a potential shift toward looser monetary policy.
Economic Data and Tariff Developments
Thursday’s economic data painted a mixed picture. The U.S. economy contracted by 0.5% in the first quarter, according to the government’s final estimate, a steeper decline than the previously reported 0.2%. Labor market weakness also intensified, with continuing jobless claims rising to 1.974 million for the week ending June 14, the highest since November 2021. Initial jobless claims for the week ending June 21 fell slightly to 236,000, but the uptick in continuing claims suggests workers are taking longer to find new jobs, raising concerns about employment risks.
Meanwhile, trade-related developments provided a tailwind for stocks. White House Press Secretary Karoline Leavitt indicated that President Trump’s July 9 deadline for countries to negotiate trade deals to avoid reciprocal tariffs was “not critical.” Stephen Miran, Trump’s chief economist, told Yahoo Finance’s Brian Sozzi that the administration might extend the deadline for countries negotiating in good faith, easing fears of immediate tariff-related disruptions. This flexibility calmed markets, which have been wary of a return to “Liberation Day” tariffs that previously rattled investors.
Sector and Stock Highlights
The technology sector, particularly AI-related stocks, continued to drive gains. Nvidia’s stock rose 1% after Loop Capital raised its price target to $250, implying a potential $6 trillion market cap, while Bank of America forecasted a $650 billion AI chip market by 2030, with Nvidia as a key beneficiary. QuantumScape (QS) soared 29% after announcing a manufacturing breakthrough in solid-state lithium-metal batteries, following a 31% gain the previous day. Core Scientific (CORZ) jumped over 28% amid reports of acquisition talks with Nvidia-backed CoreWeave, valuing the AI infrastructure and bitcoin mining firm at over $4.5 billion.
In other sectors, Circle (USDC-USD) rebounded 12% after a two-day slide, buoyed by optimism around stablecoin regulation following the Senate’s passage of the GENIUS Act. Walgreens Boots Alliance (WBA) edged higher after beating fiscal third-quarter earnings estimates, driven by cost-cutting and store closures as part of its turnaround plan ahead of a $10 billion privatization deal.
Broader Market Context
The dollar (DX=F) weakened to its lowest level since April 2022, pressured by tariff concerns and uncertainty over the Fed’s independence. Treasury yields also declined, with the 10-year note (^TNX) hovering around 4.25%. Precious metals saw gains, with platinum (PL=F) futures surging to a 2014 high of $1,411.80 per ounce, up 56% year-to-date, and palladium (PA=F) climbing over 3%.
Investors now turn their attention to Friday’s release of the Personal Consumption Expenditures (PCE) report, the Fed’s preferred inflation gauge. Any signs that Trump’s proposed tariffs are pushing prices higher could influence market expectations for monetary policy and economic growth.
The stock market’s near-record performance reflects a potent mix of optimism over rate cuts, easing trade tensions, and continued strength in technology and AI-driven sectors. However, persistent economic challenges, including a slowing labor market and tariff uncertainties, keep investors on edge. As Wall Street awaits the PCE data and further clarity on Trump’s trade and Fed policies, the market’s next moves will hinge on balancing these competing dynamics.