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Last week, U.S. capital markets continued their strong upward momentum, with the S&P 500 and Nasdaq reaching new all-time highs. This rally was fueled by a combination of easing geopolitical tensions in the Middle East, falling oil prices, and a robust performance from mega-cap tech stocks. A better-than-expected U.S. jobs report also boosted investor sentiment, showing 147,000 new jobs added in June and a slight drop in the unemployment rate to 4.1%. However, the labor force participation rate declined, and private sector hiring was relatively soft, tempering some of the optimism. Markets also responded positively to a new U.S.-Vietnam trade agreement, which provided clarity on tariffs despite higher rates than previously expected. Meanwhile, Congress passed a significant tax and spending bill, which is expected to offer a modest economic boost in 2026 but raises concerns about long-term federal debt. Bond yields rose as the strong jobs data reduced expectations for imminent Fed rate cuts, with the 2-year Treasury yield climbing notably. Overall, while bullish momentum remains strong, markets may face volatility ahead due to potential trade developments and overbought conditions.

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US equity markets surged as the S&P 500 and Nasdaq both climbed over 3% and posted record highs. Megacap technology stocks led the charge, driven by strong earnings and AI-related optimism. The broader rally was partially fueled by easing geopolitical tensions in the Middle East, which led to a sharp drop in oil prices. U.S. crude fell from over $75 to around $65 per barrel. This decline helped ease inflation concerns and supported consumer sentiment. Meanwhile, the Federal Reserve signaled a continued path toward rate cuts, with markets now pricing in two to three cuts by year-end. Increased expectations of lower long-term rates helped further boost equity valuations. However, trade tensions resurfaced late in the week as the U.S. abruptly ended talks with Canada over a digital services tax, triggering some intraday volatility.

Last week, markets reflected a cautious tone as investors digested a mix of economic signals and geopolitical developments. The Federal Reserve held interest rates steady for the fourth consecutive meeting, maintaining a patient stance amid lingering inflation and trade uncertainties. Updated projections showed a slight downgrade in 2025 GDP expectations to 1.4% and an upward revision in inflation forecasts, suggesting a stagflationary tilt. Retail sales data was mixed—headline sales declined, but the control group, which feeds into GDP, rose modestly. Housing data was broadly weak, with notable drops in permits and starts, while jobless claims remained stable. Geopolitical tensions, particularly the Israel-Iran conflict, kept oil prices elevated, contributing to market unease. Equity markets, including the S&P 500 and Russell 2000, showed signs of consolidation, with breadth indicators weakening. Overall, markets appear to be in a “wait- and-see” mode, with near-term sentiment slightly bearish barring any major geopolitical or trade-related surprises.

Last week, markets navigated a complex mix of geopolitical tension, economic data, and policy expectations. Equities experienced a late-week selloff triggered by Israeli airstrikes on Iranian nuclear facilities and subsequent counterstrikes. Oil prices surged to a four-month high, which raised concerns about inflationary pressures. However, inflation data came in cooler than expected, with CPI and PPI both undershooting forecasts, helping to anchor expectations for potential Fed rate cuts later this year. Treasury yields declined over the week, supported by strong demand in long-term bond auctions. Meanwhile, U.S. and China trade talks progressed, with a tentative framework reached, and consumer sentiment rebounded sharply, suggesting improved confidence. Market breadth also expanded, indicating broader participation in the recent equity rally despite near-term technical volatility.

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