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Anna's Markets Recap

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Saturday, 5:25 AM

July 5, 2025

Good morning news friend! Here is a quick recap of what happened in the markets this week. 📰🌟

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What Moved Markets Last Week

The holiday-shortened week ending July 4, 2025, saw U.S. stock indexes close with deceptive quietude. The S&P 500 and the Dow Jones Industrial Average both edged down 0.1%, while the Nasdaq Composite gained a modest 0.2%. These flat finishes masked significant investor anxiety driven by contradictory economic signals, creating a "stagflation-lite" environment.

Fears of an economic slowdown grew after the final estimate for Q1 2025 GDP confirmed a 0.5% annual contraction, a sharper decline than previously estimated and the first negative reading since early 2022. Conversely, inflation data offered a glimmer of hope. The core Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred gauge, rose just 0.1% month-over-month in May, its smallest increase since November 2023. The annual core PCE rate cooled to 2.6%, its lowest since March 2021, bolstering expectations for a potential September rate cut.

However, the June jobs report complicated the narrative, showing a robust addition of 206,000 jobs, beating forecasts and signaling a resilient labor market that could sustain inflationary wage pressures. The unemployment rate ticked up slightly to 4.1%. In response to the conflicting data, the 10-year U.S. Treasury yield climbed during the week, closing near 4.34%, as the market weighed the strong labor data against the hope for monetary easing.

Tech and Growth

The technology sector saw a volatile week of sell-offs and rebounds, underscoring a consolidation of power among mega-cap names leading the AI capital expenditure arms race.

NVIDIA (NVDA) opened the week with a sharp 6.7% decline but surged 6.8% the following day as investors aggressively bought the dip. The company paid its quarterly dividend on June 28 following its recent 10-for-1 stock split.

Amazon (AMZN) had a milestone week, with its stock surging 3.9% to push its market capitalization above $2 trillion for the first time. The catalyst was a report of its plan to launch a discount shopping section to compete directly with platforms like Temu and Shein.

Apple (AAPL) shares climbed to finish the week near $213, shrugging off formal charges from the EU under the Digital Markets Act. The stock jumped 2% mid-week after an upgrade from Rosenblatt Securities, which cited Apple's privacy-centric AI strategy as a key advantage.

Meta Platforms (META) announced a strategic deal to acquire a 49% stake in data-labeling firm Scale AI for $14 billion, a significant investment to bolster its end-to-end AI infrastructure.

Tesla (TSLA) shares rose after reporting that Q2 deliveries fell 13% year-over-year, a result that, while negative, was better than the market's worst fears. The stock also gained on positive sentiment after competitor Rivian announced a $5 billion investment from Volkswagen.

Banks and Financials

The financial sector was a tale of two narratives. Large banks demonstrated resilience, while payment networks faced a significant disruptive threat.

JPMorgan Chase (JPM) and Bank of America (BAC) successfully passed the Federal Reserve's annual stress tests. Following the results, Bank of America announced an 8% dividend increase, while JPMorgan boosted its dividend and announced a new $50 billion share repurchase authorization.

Visa (V) and Mastercard (MA) faced a serious challenge after a report that Walmart and Amazon are exploring proprietary stablecoins to bypass traditional card networks. Visa’s stock plunged over 5% on the news, and analysts issued a rare "double downgrade" for Mastercard, citing the stablecoin development as a tangible risk.

Consumer Goods and Healthcare

Company-specific catalysts drove performance in the defensive consumer and healthcare sectors.

Eli Lilly (LLY) continued to benefit from overwhelming demand for its GLP-1 drugs, Mounjaro and Zepbound. The primary focus for the company has shifted to scaling manufacturing to meet supply constraints.

AbbVie (ABBV) announced the acquisition of cell therapy developer Capstan Therapeutics to bolster its immunology pipeline as it navigates the patent expiration of its blockbuster drug, Humira.

UnitedHealth Group (UNH), a significant market laggard year-to-date, appointed a new CEO to its Optum Health division in an effort to restore confidence amid pressures from rising medical costs and a DOJ investigation.

Costco (COST) faced a new legal challenge as Lululemon filed a lawsuit alleging the sale of unauthorized "dupes" of its apparel designs.

Energy and Industrials

Energy and industrial bellwethers offered diverging views on the economy.

Exxon Mobil (XOM) projected confidence, proceeding with its plan for $20 billion in annual share repurchases through 2026. The company is benefiting from stable energy prices and the successful integration of its Pioneer Natural Resources acquisition.

Home Depot (HD) presented a more cautious picture, reaffirming a guarded financial outlook. Recent results showed that while total sales grew, the average ticket size per customer was flat, indicating that household budgets for discretionary home improvement projects remain tight.

Commodities

Gold served as the week's true fear gauge, reflecting the market's deep-seated uncertainty. The precious metal rallied mid-week on the softer-than-expected PCE data and a weaker U.S. dollar, with prices pushing toward $2,330 per ounce before settling around $2,325. The metal's strength highlights its dual role as a hedge against potential policy outcomes: an inflation hedge if the Fed cuts rates prematurely, and a safe-haven asset if monetary policy remains tight and triggers a recession.

Did you know we also write in-depth deep dives? They are long, packed with insights, and have received rave reviews. If you’re up for a detailed, action-packed read, check them out:

• America’s Housing Paradox - An Analysis of the US Housing Market

• The Stablecoin Trilemma - Bridging Digital Finance, Monetary Policy, and Systemic Risk

• Deconstructing the $66 Billion Citiadel Enigma

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Baked with love,

Anna Eisenberg ❤️