S&P 500 Hits Record on Vietnam Deal as Tech Climbs: Markets Wrap

This content was published on July 2, 2025 - 22:10

8 minutes

(Bloomberg) — A rally in several big techs fueled gains in stocks, with the market extending its advance as President Donald Trump said he reached a trade deal with Vietnam. Treasuries fell as a selloff in UK bonds underscored deficit worries. The dollar was steady.

Following earlier losses driven by weak jobs data, the S&P 500 rose to fresh all-time highs. Nike Inc. climbed alongside other apparel and footwear companies amid hopes the latest US trade deal will avert a potential supply-chain catastrophe. Tech megacaps led gains, with Tesla Inc. jumping 5% as a drop in sales was seen as better than feared. Marvell Technology Inc. slid about 2.5% on a report that Microsoft Corp. is scaling back its ambitions for AI chips to overcome delays.

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Longer-dated Treasuries underperformed, following moves in the UK, where concerns about Chancellor of the Exchequer Rachel Reeves’ future reignited questions over the nation’s fiscal position. Investors have raised similar concerns in the US, where the Senate passed Trump’s sweeping tax and spending bill.

In the run-up to the jobs report, economists forecast employers added 110,000 jobs in June — the fewest in four months — amid a slight rise in the unemployment rate to 4.3%. The Bureau of Labor Statistics report is due Thursday, a day earlier than usual because of the Independence Day holiday.

Data Wednesday showed employment at US companies fell for the first time in over two years. Despite signs of a downshift, Federal Reserve Chair Jerome Powell has repeated the labor market remains solid. Policymakers have refrained from lowering interest rates this year as they wait to see the impact of tariffs on inflation.

“One of the reasons the Fed has been able to be patient before cutting rates was because the job market was holding up so well, so if that were to change, then the Fed may be forced to move earlier than they would like,” said Chris Zaccarelli at Northlight Asset Management.

Following the ADP Research’s private payrolls data, traders added to wagers on at least two rate reductions this year, with the first coming in September. If the upcoming jobs report shows further weakness, traders reckon the Fed could move up cuts.

“The ADP report increased the odds of a downside surprise in Thursday’s nonfarm payroll release,” said Jeff Roach at LPL Financial. “Investor jitters could be a catalyst for a drop in yields tomorrow if the jobs report is weaker than expected. I expect a weaker-than-consensus report, increasing the odds the Fed cuts three times this year.”

A survey conducted by 22V Research showed investors are watching US payrolls more than normal this time and expect a weaker print. Among the respondents, 44% expect the reaction to the data will be “mixed/negligible”, 41% said “risk-off” and only 15% “risk-on.”

“Even a modestly underwhelming print versus the current +110,000 headline consensus would likely be dismissed as already priced in at current levels,” said Ian Lyngen and Vail Hartman at BMO Capital Markets. “It would likely take a sub-50,000 headline payrolls figure to get the market decidedly in bond-bullish mode.”

A single disappointing payrolls print alone wouldn’t be enough to drive a July Fed move, they said.

Meantime, while stock buyers have stormed back into the market over the past couple of months, Zaccarelli at Northlight Asset Management says he’d be cautious right now because valuations are high, the economy is slowing its pace of expansion and it’s possible that we’ve reached full employment.

Sentiment has been supportive of the rebound in US stocks, but the outlook for valuations and earnings suggests the rally is getting overbought from a fundamental perspective, according to RBC Capital Markets strategists led by Lori Calvasina.

“Overall conditions in US equities didn’t seem frothy quite yet but were headed down that path,” they wrote. “If we do end up getting some inflation pressure or broader economic potholes from tariffs or the Fed doesn’t cut after all, we think it will come as a negative surprise to many investors.”

As stocks snapped back from the throes of April’s tariff selloff, a Barclays Plc measure of the market’s “irrational exuberance” has seen a swift jump. The one-month average on the proprietary gauge has swung back into the double-digits for the first time since February — reaching levels that have signaled extreme frothiness in the past.

“Just when a bit of panic set into the minds of some investors, stocks turned seemingly on a dime and gained back all that was lost and then some,” said Scott Wren at Wells Fargo Investment Institute. “Our feel is that stocks are ahead of themselves, and we are looking to trim positions in overvalued markets and sectors.”

Bloomberg Intelligence’s Market Pulse gauge approached manic levels in June, hinting that the market’s record run is in jeopardy of becoming overheated.

“Historically, markets have cooled after such sentiment peaks,” said BI’s Gillian Wolff.

Corporate Highlights:

Apple Inc. climbed after Jefferies raised its recommendation on the tech giant to hold from underperform.
Intel Corp. slid after Reuters reported CEO Lip-Bu Tan is exploring a potential strategy shift in its foundry business that would entail no longer marketing certain chipmaking technology to external customers, citing people familiar.
OpenAI has agreed to rent a massive amount of computing power from Oracle Corp. data centers as part of its Stargate initiative, underscoring the intense requirements for cutting-edge artificial intelligence products.
Microsoft Corp. began job cuts that will impact about 9,000 workers, its second major wave of layoffs this year as it seeks to control costs while ramping up on artificial intelligence spending.
Wall Street’s largest lenders boosted their dividends after passing this year’s Federal Reserve stress tests, a hurdle that regulators made easier to clear by softening some of the requirements laid out in previous years.
Health insurer Centene Corp. shocked investors when it withdrew its profit outlook on precipitously rising risks from Affordable Care Act plans, sending shares plummeting.
The US Justice Department urged a judge in Texas to accept a proposed settlement agreement reached with Boeing Co. that would allow the planemaker to avoid a criminal charge in a longstanding case over two fatal crashes of its 737 Max jets.
Bombardier Inc. jumped after the Quebec-based private jet-maker announced a $1.7 billion aircraft order with an anonymous client.
Rivian Automotive Inc. produced about half as many electric vehicles as Wall Street expected in the second quarter prior to the launch of 2026 model year vehicles later this month.

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