Where Are Markets Today?
We’re seeing a cautiously optimistic sentiment in U.S. and European equity futures this morning with broadly flat to slightly higher markets as we approach a highly anticipated U.S. labour report release. S&P 500 and Nasdaq 100 futures are near unchanged with Dow futures up by 29 points. European counterparts are also doing the same with FTSE 100 trading up by 0.3%, while DAX and CAC 40 are up by 0.2% and FTSE MIB is up by 0.15%. This is after a strong day yesterday in U.S. cash markets where the S&P 500 and Nasdaq set record closing highs after the day witnessed a tech-led rebound and benign bond yields.
Among the sentiment undercurrents is President Trump’s end-quarter surprise of a bilateral trade agreement with Vietnam that includes a 20% tariff on Vietnamese imports and a 40% surcharge on rerouted goods—a move the markets see as strategic and inflation-sensitive. While the transparency was a headwind to some U.S. industries, Trump’s refusal to roll over the July 9 trade deadline and his public skepticism of a potential Japan agreement provide an undercurrent of geo-political stress that’s pressuring forward guidance for export-oriented industries. We at Zaye Capital Markets believe that this trade dynamic is showing up as a structural influence in Q3 positioning in commodities, logistics, and multinational tech. European equity futures are finding support in U.S. momentum but remain anchored in domestic political drama. The U.K. particularly is feeling the confidence drag following Finance Minister Rachel Reeves being brought to tears in Parliament as the government is under fire for welfare reform. With patchy comfort being provided by Prime Minister support, we expect European market activity to remain headline-sensitive. For investors, that translates into a tactical play in European defensive sectors, and divergence trades between growth-leading eurozone economies and politically exposed economies.
Into today’s economic calendar, everyone will be watching the U.S. jobs report, Average Hourly Earnings, and ISM Services PMI. From a Zaye Capital Markets perspective, we are looking for any negative surprises to reinforce the Fed’s cautionary message yet again, providing added fuel to risk assets and bolstering tech and consumer discretionary. Conversely, a stronger print might precipitate a tactical rotation into value and cyclicals as the market reassesses the rate trajectory. Until then, futures remain in a tenuous equilibrium—divided between near-term trade sentiment and longer-term macro headwinds with today’s data as a critical inflection point.
Major Index Performance as of July 2, 2025
- S&P 500 (SPY): 620.45 USD | ▲ +0.44%
- Nasdaq (QQQ): 550.80 USD | ▲ +0.70%
- Russell 2000 (IWM): 221.03 USD | ▲ +1.35%
- Dow Jones (DIA): 444.71 USD | ▼ -0.05%
The Seven Wonders & The S&P 500
S&P 500 is now moving with diminishing conviction as “Magnificent Seven” is showing widespread weakness. The mega-caps like Microsoft, Apple, and Tesla are down, dragging the index lower despite strong cyclical strength.
Drivers Behind The Market Movement
At Zaye Capital Markets, we are tracking three key drivers of the current market tone in the U.S. and Europe: new trade policy momentum, macroeconomic data positioning, and domestic politics news headlines. Collectively, these drivers are dictating the way investors are repricing risk into the week’s finish.
1. Trade Policy Developments
President Trump’s declaration today of a new trade deal with Vietnam, including a 20% duty on Vietnamese imports and a tariff on trans-shipped merchandise at the same 40% level, has managed to clarify supply-chain sensitive sectors and sparked futures overnight. But failure to adjust the July 9 trade deadline and expressed reservations regarding the achievement of a deal with Japan are guaranteeing that trade anxiety around the world will continue. These mixed signals are being voiced in sector-specific volatility, especially in U.S. industrials and European export-oriented plays with high sensitivity to Southeast Asian manufacturing channels.
2. Macroeconomic Indicators & Fed Outlook
Markets are set to walk cautiously in light of today’s major releases—Non-Farm Payrolls, Average Hourly Earnings, Unemployment Rate, and ISM Services PMI. The June drop in private-sector employment by a staggering 33,000 as indicated in the early part of this week gave warning signals of a slowing labour market. This added fuel to speculations of the Federal Reserve’s next move and supported the expectations of a rate cut. Equity markets have risen modestly with bond yields kept in check. Today’s releases have the potential to distinctly delineate short-term rate expectations and influence institutional flow direction across asset classes.
3. Political & Fiscal Tension
In the U.K., markets continued to absorb political turmoil after Finance Minister Rachel Reeves became overcome with emotion in Parliament as welfare reform pressures mounted. Even with the full backing of the Prime Minister, the episode spooked London equity and bond sentiment. Trump’s ambitious tax and immigration bill worth $3.3 trillion sailed through the Senate with a tie-breaking vote but needs to overcome obstacles in the House. Passage of the bill demonstrates the scale of fiscal expansion available and can influence the bond markets and resuscitate long-term debt sustainability concerns. These are collectively building a market environment of guarded optimism, news sensitivity, and growing headline risk—requiring precision in reading policy and strategy deployment.
DIGESTING ECONOMIC DATA:
The TRUMP Tweets and Their Implications
We at Zaye Capital Markets are tracking the new policy rhetoric and political tone set by the then US President Trump, whose string of legislative, geopolitical, and cultural pronouncements is increasingly affecting financial markets at large. His latest string of pronouncements—foreign policy to fiscal reform—has brought about volatility and reset expectations on stocks, commodities, and tokenized assets as well.
At the forefront of the developments is Senate approval of Trump’s omnibus policy legislation, pushed through on a tie-breaking Vice President Vance vote. The legislation couples tax reform and immigration crackdown, suggesting pro-business tilt but also fiscal sustainability and geopolitical tensions concerns. Elsewhere, Trump’s refusal to roll over the July 9 trade deadline and public doubts over a deal with Japan bring new risk to global trade streams. Should tariffs escalate, auto, tech, and agricultural supply chains are threatened with new disruption—bearing down on inflation expectations and global growth prospects.
At the same time, Trump’s geopolitical communications have been contradictory. His declaration that Israel had agreed to a 60-day ceasefire offer with Hamas brought temporary respite to Middle East tensions, providing a short-term reprieve to oil markets. But his remarks distancing the administration from Iran and threatening more tariffs are a sign of an assertive diplomatic approach, keeping markets on edge about geopolitical tensions. This contradictory messaging—half dovish, half hawkish—is driving sector-specific volatility, particularly in commodities and defence stocks. In addition to policy, Trump’s off-the-cuff remarks—such as promising to “use DOGE against Elon Musk” and introducing a new fragrance brand—continue to blur the lines between politics and brand. While such stunts seem ancillary, they can have second-order effects on crypto sentiment, meme-stock price movements, and the retail investing landscape writ large. With the markets having to read the meaning behind legislative agendas and headline theater, risk managers and investors must decode not only what happened—but what will be said.
Labour Shock And Tariff Transmission
At Zaye Capital Markets, we are carefully considering June’s 33,000 private payroll decline—a jarring divergence from more than two years of running employment growth. The sheer magnitude of divergence from 98,000 consensus is a sign of underlying weaknesses in those parts of the labor market most exposed to policy-induced cost distortions. Although headline job losses are still below historical trends, that kind of decline is a sign of underlying hedging behavior by employers, particularly in manufacturing employment.
This soft labour cannot be separated from the prevailing backdrop of trade. As tariffs again become a macro headwind, companies are showing very early signs of delaying hiring in tariff-exposed sectors. Historical elasticity models project a 0.5% employment drag per 10% increase in tariffs, putting manufacturing, logistics, and import-reliant industries under pressures. Investors still refrain from duly adjusting such employment-tariff feedback loop, creating valuation differences in firms that are able to avoid tariff risk through nearshoring or gain productivity gains through automation.
What the analysts should be monitoring next is coordination between forward employment expectations and capex plans. We still believe industrial automation and workforce analytics firms are structurally undervalued with firms more interested in productivity-driven investments rather than hiring growth. Key metrics to watch are average weekly working hours, goods-producing wage inflation, and real-time capital goods orders—metrics that will drive pricing power and equity performance on a tariff-skewed recovering trend.
Normalisation Of Redundancies And Automatic Tailwinds
At Zaye Capital Markets, we interpret June 2025’s -1.6% year-over-year month-over-month decrease in job cutting announcements as a possible inflection in the post-tightening cycle of labour. Following a turbulent spate of extreme acceleration in jobs cutting in technology and logistics, recent trends are exhibiting a stabilising rhythm. This about-turn follows last month’s +47% spike and is in line with historical precedent when a spike in layoffs is short-lived because companies react to margin pressures through structural reboot rather than outright downsizing.
The transition towards more discriminate layoffs—particularly among white-collar and AI-replacement jobs—is a sign of a phase of mature corporate efficiency realignment. We interpret it as a sign of moderation in cycles and not as a sign of systemic weakness. The numbers remind us of past inflection points, like the 2023 round of layoffs that began to slow down by Q4 as businesses settled into inflation-era cost bases and realigned growth estimates against changing dependency on inputs and wage compression.
Analysts then need to shift focus to adoption rates of automation and employment trajectories by sector. Industrial software firms and artificial intelligence-based platforms are still undervalued during such labor reshaping, as firms are putting efficiency solutions over human resources. Tracking hiring intent gauges, robot process automation (RPA) implementations, and tech-led capex expenditures—these are what will tell you where alpha is in a reshaping, not shrinking, labor market.
Fragile Manufacturing Green Shoots
At Zaye Capital Markets, we are closely following the acceleration of U.S. manufacturing growth, with nine industries now reporting expansion in June 2025. While that’s the strongest reading in months, it’s still quite subdued next to seventeen in 2018 and below historical expansion highs. The tepid rise is encouraging in a cautious kind of way, but all context—growth remains narrow and perhaps policy-skewed by tariff-driven input substitution rather than strong demand-based growth.
Context muddles the story. While tariffs have increased exponentially to collect $300 bil annually vs. $80 bil, they are causing distortions that have artificially supported activity in specific domestic verticals but have discouraged authentic capex confidence throughout the broader industrial base. And that, and last week’s private payroll report showing a 33,000 jobs lost unexpectedly, is a reminder that factory resilience is a different animal from labour market resilience. This decoupling of industrial activity from the world of jobs is a signal that firms are embracing more streamlined operations, employing capital rather than employees.
We believe suppliers of capital goods and modular machinery makers remain undervalued, particularly those most likely to benefit from onshoring bonus and tariff-induced domestic procurement. Investors will have to monitor ISM new orders and input prices to determine whether this increase can be maintained or is a fiscal filter by-product. Monitoring diffusion breadth and inventory rebuild cycles will be the means to separate a lasting industrial rebound or a transitory tariff halo.
Hiring Slowdown And Industrial Fatigue
At Zaye Capital Markets, we are monitoring closely the slowing pace of hiring in the durable goods market—currently at a cycle low through May 2025, based on most recent JOLTS data. The nature of the slowdown is a sign of rising caution in capital-intensive areas like machinery and autos, which in the past have followed the business cycle. Although 2024 saw a bout of optimism in the wake of strengthening orders, recent developments suggest a transition to conservation, driven by growing cost uncertainty and limited visibility of foreign demand.
We cannot separate this recruitment turnaround from supply chain pressures internationally and a readjustment of capital spending in the midst of tightening finances. The recruitment turnaround is despite strong backlogs and sturdy order books throughout last year, reinforcing the view that firms are increasingly relying on productivity gains instead of labour growth. Experience warns that recruitment turnarounds such as this one have in the past come ahead of industrial slowdowns overall, with data from central banks suggesting a 0.7% decline in GDP for every 1% decline in factory jobs—a differential investors should not dismiss.
We still have faith in capital-intensive automation companies and component providers with pricing power, both of whom will be victors as industrial players reduce hiring but spend on resiliency. Investors can track manufacturing wage inflation, completion rates of backlogs, and supplier delivery indices to know where the capital will be invested next. Durable goods may be decelerating, but it is also rebalancing—and that is where the opportunity lies.
Price Pressures Outpace Supply Normalisation
At Zaye Capital Markets, we’re watching the changing dynamic in the manufacturing PMI complex where there’s been a wide divergence between the supplier deliveries index and the prices paid index. The ISM Manufacturing PMI remained in contraction at 49% through June 2025 but supplier deliveries recorded a neutral 50.7%—showing firm lead times even while there was a sustained spike in input costs. The bifurcation shows that logistics backlogs are no longer going to be a leading restrainer of output but rather price volatility is becoming increasingly the leading headwind to continuity of operations.
This divergence is one aspect of a broader rebalancing of supply chains around the world, with adaptive logistics tempering delivery times even as input and component prices rise. History warns, however, against presuming that this will continue. Similar patterns in 2008—with input prices rising while supplier lead times remained fixed—are foreshadowing more precipitous industrial slowdowns. With this now the fourth month of sequential manufacturing decline, markets must consider whether these protracted cost structures are sustainable in the face of declining order flows and contracted corporate margins.
There is also upside potential in procurement and supply chain optimising software suppliers, underappreciated at a time when cost pressures are so severe. Watch the spread between ISM’s supplier deliveries and prices paid indices as an early warning indicator for the health of manufacturing. If it continues to widen, it won’t be a signal of strength but of margins getting squeezed. Watch order-to-delivery cycle trends and producer price pass-through rates closely—indictors of whether or not firms will be able to weather the next industrial dislocation.
Regional Service Sector Stresses And Policy Shocks
At Zaye Capital Markets, we’re pointing out Texas’ services sector’s continued employment decline as a potential early warning indicator of wider national softness. The decline, evident in full-time and part-time employment since 2023, goes against the historical role of services as a stabiliser in the wider economy. With services representing over half of total employment, any sustained decline—specifically in high-employment states such as Texas—deserves strategic reconsideration. The unexpected -33,000 June 2025 job loss rings alarm bells, especially as it’s the first national payroll decline since March 2023.
Timing is interesting. This softening of labor follows new U.S. tariffs that were implemented at the start of Q2, a move that is potentially putting unusual stress on channels of service-based trade and sourcing of inputs, particularly in business services and logistics. The previously robust service sectors like warehousing, consulting, and wholesale activity now have to contend with inflated cost bases and uncertain demand as a consequence. And with regional indices of the Dallas Fed also indicating simultaneous weakening, the data is painting a weaker environment post-reopening rather than what is indicated by headline GDP readings.
We believe that beneath the surface there is underappreciated potential in regional logistics tech firms and workflow automation solution providers, particularly those allowing distributed service models. For signs of ongoing dislocation, monitor regional Fed indices, business services vacancy rates, and wage pressures in service sectors closely. The next turning point will be guided not by averages at the national level but by how much policy impacts radiate through key employment hubs—Texas is the bellwether to monitor.
Auto Tariffs Distort Vehicle Valuations
At Zaye Capital Markets, we’re closely monitoring the steepest 6.4% year-over-year spike in June 2025’s Manheim Used Vehicle Value Index—unanticipated acceleration that runs counter to anticipated weakening in consumer demand. Building upon the 25% tariff imposed on cars imported from overseas, the spike appears to have redirected buyers’ enthusiasm to used cars. As such, used-car market rate of change has decoupled with traditional economics, triggering new volatility in a sector otherwise tracking discretionary consumer spend.
This decoupling is particularly acute against a backdrop of a slowing employment market, with private payrolls data citing a 33,000 fall last month—the first fall in over two years. While used car demand has historically followed household confidence and security of income, recent direction seems to be a consequence of consumers perhaps acting defensively, front-running purchases ahead of tariff-provoked inflation in the new car market. The behavior is a sign of anticipatory demand rather than underlying strength and questions whether recent gains are sustainable.
We see value comparatively in auto parts distributors and used-vehicle remarketing platforms, especially those that are insulated from import volatilities with scalable digital platforms. Trends in wholesale auction prices, lease-return volume and dealer inventory turnover are trends that should be followed by analysts. If tariffs persist and labor softness intensifies, used-vehicle market could be a source of short-term inflationary pressures—emphasizing that it is important to differentiate policy-generated and fundamentals-based support in pricing.
Auto Sales Whipsaw And Tariff Shock Absorption
At Zaye Capital Markets, we are following closely as US car sales have surged to a year-over-year peak of 18 million units in April of 2025 before correcting back to 15 million in July. This temporary spike, driven by front-loading by consumers anticipating the 25% auto tariff that took place in early Q2, is a classic example of how tariff anticipation distorts demand cycles. What we are witnessing is a market adjusting to new not only prices but also changed consumer intent as compulsion to purchase gives way to indecision.
The future implications are profound. Industry models imply 2025 sales with a 1.8 million unit decline, not just an outcome of reduced affordability but also of behavioural adjustment on the part of price-sensitive consumers. Initial anecdotal confirmation of car deferments and higher repairs implies that long-term demand elasticity will be far less than was presumed. With higher prices permeating into financing costs and premium insurance, the whole auto ecosystem can anticipate sequential softening, though order books were supposedly strong in Q1.
We believe automatic finance platforms and aftermarket service providers are not adequately valued today given that they are exposed to a more counter-cyclical and defensive part of the car market. Credit delinquencies in autos loans, extended warranty penetrations, and service volume at dealers are what we’d like to be concentrating in attempting to understand where capital is flowing. With the ripple effects of tariffs now propagating through to postpurchase behavior, next opportunity is not volume, but value capture on the periphery of the funnel of sales.
Rethinking Labour Demand
At Zaye Capital Markets, we are seeing a sharpest ever U.S. labor market realignment, with May 2025 job openings reaching a six-month high of 7.77 million. Leading the way in this surge is the healthcare and education service sector, with 1.76 million openings—surpassing the traditionally dominant professional and business sector. This realignment equates to a spread of employment demand into traditionally defensively positioned sectors but increasingly becoming growth leaders when compared to consumer behavior realignment and public sector funding cycles.
This leap is not entirely cyclical. Leisure and hospitality also posted a strong 314,000 increase in job openings, perhaps from revived optimism on discretionary services amidst underlying economic weakness. But hiring rates remain lackluster, and that suggests that while intent is indicated, caution is still the byword in actual workforce growth—most likely because of wage rigidities, tariff-related input prices, and increased economic policy uncertainty. The gap between soaring openings and lackluster hiring suggests potential mismatches in pay expectations, geography, or skills.
We consider human capital technology platforms and local staffing agencies, particularly those that are associated with structurally expanding health systems and education networks, to be long-term undervalued. Quit rates, time-to-hire, and non-tech wage advances are what analysts need to be monitoring to determine where real labour tightness can translate pricing power. As the post-2008 tech theme gives way to healthcare and services resilience, the smart capital bet is to find where structural, not cyclical, demand is arising.
Regional Recovery, Structural Disruption
We at Zaye Capital Markets interpret the rise in the Dallas Fed Services Index from -10.1 in May to -4.4 in June 2025 as a sign of local economic reacceleration, driven by Texas’ stubbornly resilient services sector. Historically, the index has been mean-reverting in character, recording steep downturns and slow upturns, especially in the post-shock climate. Revenue sentiment also improved to -4.1, with expectations of forward-looking capital expenditure rising to +14, suggesting growing confidence by businesses to accelerate operations into H2.
But optimism is tempered by structural changes. The jobs index dropped to -1.2 even as the net service sector saw gains—a disconnect that suggests that firms may be increasing production without supporting staff increases. The likely culprit is automation. As service firms continue to deploy AI and process automation software, labour demand appears to be decoupling from the growth in production. This looks like broader research that suggests up to 10% of service-sector employment could be structurally replaced by technology by 2026, particularly in admin supporting, customer service, and data-intensive work.
We believe enterprise automation vendors and AI service orchestration platforms are still underrated in this shift. We’d be tracking CapEx spend allocations and employee utilization rates in local data to see where labor is being replaced with capital. Although Texas is experiencing early indications of stabilization in the service sector, genuine inflexion will be contingent upon whether firms redeploy automation savings to expansion—and just go more efficient, reshaping the local employment profile instead.
Hiring Slowdown And Policy Lag Effects
At Zaye Capital Markets, we are closely monitoring the hires rate in the U.S., which dropped to 3.4% in May 2025—at the lower end of its range since 2000. Now that that stimulus is coming off, hiring is appearing more discretionary, a slowing—instead of imploding—labor market.
Such deceleration is characteristic in the aftermath of protracted fiscal cycles. Empirically, it is found that labour demand tends to follow behind policy change, delivering temporary but recurrent cyclical volatility that replicates recessionary patterns even in well-structured economies. All that said, yesterday’s 33,000 jobs drop in the June ADP report lends credence to concerns that it might be more than a matter of cyclical normalization. To be sure, labour soft spots in construction, logistics, and professional services indicated widespread uncertainty in a range of different levels of demand.
We see hiring analytics firms and human capital productivity platforms as undervalued in such a background, and particularly those that help organizations reset hiring plans without adding to fixed costs. Quit rates, labor participation rates, and job posting tenure metrics are measures that analysts must track to assess just how sticky such a slowdown will be. If the labour market is slowing indeed to recessionary levels, opportunity is not in volume hiring but in platforms that optimize more efficient lean workforce deployment with strategic insight.
Upcoming Economic Events
Average hourly earnings month-over-month, Nonfarm employment change, Unemployment rate, Unemployment claims, ISM Service PMI
As we move deeper through the week, the macroeconomic spotlight turns to a pivotal set of labor and service sector data that have a potential to realign Fed policy expectations—and corporate earnings estimates. With market volatilities reintroducing themselves to the jobs world, and inflation pressures still murky, next week’s run of reports have a good chance to entrench optimism—and spark a risk rethink through asset classes. These are the things to watch:
Average Hourly Earnings m/m
Pay growth is still the heartbeat of inflation pressure.
- If hourly wages are hotter than expected, warning bells will sound at Fed—that is, businesses are still having trouble finding or keeping employees, and it could drive cost-push inflation. Watch for yields to rise, equities to shift out of tech and into value, and the U.S. dollar to strengthen.
- If softer than expected, it could represent cooling in the labour market and support risk appetite—especially in growth and consumer discretionary shares—as the inflation narrative loses momentum.
Change in Non-Agricultural
This is the market standard against which to gauge job growth.
- A print higher than anticipated would anticipate labor market resilience, support cyclical shares, and even rekindle hopes of Fed hawkishness.
- But a large miss would justify the warning associated with June’s ADP number. Risk assets can fall, bond yields will probably decline, and utility and healthcare stocks may attract inflows as investors become cautious.
Unemployment Rate
- Unemployment decline below forecast would affirm labour market strength but possibly also support inflation risk and build the case for a pause in policy at the same time.
- In contrast, a rise above forecast would exacerbate recent weakness in hiring, putting further pressure on the Fed to change its rate policy and possibly kindling speculation over a future easing—particularly if supplemented by weak payroll and wage reports.
Unemployment Claims
Early prints are a high-frequency pulse indicator.
- An under-print will be interpreted as a bullish indication of the strength of labour, which will underpin cyclical risk appetite.
- A higher print, though—especially one speeding up on a week-on-week basis—will trigger recession talk. Markets will respond with a flight to safety, with treasuries and defensive stocks likely to rise.
ISM Services PMI
Being the largest portion of U.S. GDP, PMI in services is a vital indicator of level of optimism.
- A beat above forecast would be a sign of robust business and demand—perhaps stoking rate hike concern and limiting the greenback’s decline.
- If it disappoints, it may be taken as a sign of a general economic slowing, selling stocks and triggering a safety flight.
Stock Market Performance
Recovery Picks up Strength; Underlying market Breadth Still Unstable
We continue to analyze equity market behavior across Zaye Capital Markets in terms of structural resilience and drawdown risk. Major indices have rebounded pretty vigorously off the April 8th lows, but the underlying return distribution remains skewed—still a market with selective strength and widespread member-level weakness.
Here is our analysis of significant milestones:
S&P 500: Headline Strength Hides Deeper Weakening
S&P 500: +5% YTD | +24% since 4/8 low | -19% from YTD peak | Avg. member: -24%
The S&P 500 is up +24% from its low in April, with a respectable +5% YTD gain. Still, a -19% peak-to-trough decline and -24% average member decline show that underlying weakness is still lurking under the surface of the index. This remains a narrow leadership market.
Nasdaq: Shaky Foundation, Firm Rebound
NASDAQ: +5% YTD | +32% since 4/8 low | -24% from YTD high | Avg. member: -45%
The NASDAQ has experienced its strongest bounce, +32% over recent bottoms. However, despite a +5% YTD print, member-level declines of -45% on average are a reflection of enormous concentration of performance and that a vast majority of constituents are still under extreme stress.
Russell 2000: Small-Cap Struggles Continue
Russell 2000: -1% YTD | +25% since 4/8 low | -24% from YTD high | Avg. member: -36% Small-cap stocks remain the weakest structural link. While the Russell 2000 has recovered +25%, it remains down -1% YTD, and the -24% index drop and -36% average member decline reflect continued investor caution and liquidity issues in the group.
Dow Jones: Relative Outperformance with Caveats
Dow Jones: +5% YTD | +18% from 4/8 low | -16% below YTD peak | Avg. member: -23% The Dow Jones has the most stable year-to-date shape with +5% return and backed by exposure to industrials and defensives. But corrective -16% drawdown and -23% average member loss remind us that volatility has not spared even the strongest constituents.
THE STRONGEST SECTOR IN ALL THESE INDICES
Industrials Take the Lead, but Sector-wide Dynamics Present a More Complex Picture
We at Zaye Capital Markets still concentrate on sector-level dispersion within the S&P 500 and, as of July 1, 2025, the best-performing segment year-to-date is Industrials. Industrials, at a +12.3% YTD return, have beaten all other sectors, an indication of investor optimism in capital goods, logistics, and infrastructure-related plays as defensive and cyclical exposure begins to rotate.
Financials (+9.0%) and Communication Services (+9.3%) also gained strongly but were divided when it came to momentum—Communication Services dropped -1.2% (month-to-date), but Financials were relatively flat with a gain of +0.5%. Materials (+7.4% YTD) and Utilities (+8.1% YTD) also showed good performance, supported by strength in commodities and defense rotation, respectively.
Conversely, Consumer Discretionary has been the worst performer, down -4.1% YTD, albeit with a modest +0.2% rebound last month. Underperformance is a result of margin pressure and elasticity of demand in more conservative economic environments. Contrariwise, in the meantime, are Information Technology (+6.5% YTD) and Health Care (-0.6% YTD) with a bifurcated growth narrative—tech retreating -1.1% MTD and health care persisting to disappoint. As we now turn the page to Q3, Industrials are not just a focus as a result of outperformance, but as a result of positioning in a market growing increasingly attuned to operating size and capital deployment discipline.
Earnings
Yesterday’s Earnings: July 2, 2025
- National Beverage Corp. (FIZZ)
National Beverage announced Q4 earnings per share of $0.48, as per consensus estimates. The firm generated revenue of $314 million, significantly above estimates at around $10.7 million more than expected. Net income totaled $44.8 million, driven by excellent summer campaign implementation. The firm generated a 45.7% return on equity and a 15.7% net margin, exhibiting continued profitability. Investors should monitor effectiveness of brand promotion efforts, ability to maintain margins in a competitive market environment, and cash utilization by management leading up to fiscal 2026.
- UniFirst Corporation (UNF)
UniFirst’s Q3 adjusted EPS of $2.13 beat the $2.09 that had been estimated. Net income was $39.7 million, or 4.3% higher year-over-year. Revenue was higher at $610.8 million, just short of the $614.5 million estimate. Operating income was lower, but adjusted EBITDA was unchanged. The positive news here is the way revenue is divided between its uniform rental and facility services businesses, how well it managed to maintain margins in a cost inflation environment, and its reaffirmed full-year fiscal 2025 guidance.
Today’s Earnings (July 3, 2025)
- Park Aerospace Corp. (PKE)
Later today, following close, Park Aerospace will release its Q4 results. Highlights of interest are composite materials volume growth, trends in gross margin, and forward guidance. The breakdown of end-markets revenue in segments such as radomes, hypersonic systems, and engine components will be closely monitored by investors, particularly in the context of continued aerospace resiliency. Supply chain stability, cost discipline, and operational efficiency will be critical in ascertaining the quality of earnings.
Stock Market News – Thursday, 3rd July 2025
Markets remain exposed to macro crosscurrents as they move into the second half of the year. Outstanding to date inflation pressures and additional tariffs remain to distort pricing throughout industries, and investor positioning has turned defensive. A dovish Fed narrative and soft labor reads are now offset against corporate earnings resilience and sector rotation. Equity markets are losing traction, especially among megacap technology leaders.
Stock Prices
Economic & Trade Developments
New economics continues to signal robust inflation and uneven job growth, which is curbing hopes of short-run rate respite. Tariff pressures have resumed, with new tariffs imposed on foreign autos causing weakness in auto, industrial, and discretionary groups. Breadth remains narrow, and investors are rotating through groups that have pricing power and decent margins.
The Seven Wonders & The S&P 500
S&P 500 is now moving with diminishing conviction as “Magnificent Seven” is showing widespread weakness. The mega-caps like Microsoft, Apple, and Tesla are down, dragging the index lower despite strong cyclical strength.
MSFT REVERSES COURSE ON AI CHIP GOALS IN WAKE OF DELAYS — BENEFITS TO $NVDA WITH DEMAND REALIGNS TO ITS STACK
This new development is a plus for Nvidia as hyperscaler demand re-consolidates around its established GPU platform, further ahead in AI infrastructure. Microsoft’s withdrawal, however, raises issues with its vertical integration plans, triggering broader concern on the speed of next-gen cloud deployment.
Investor appetite for tech has definitely cooled, and as the average drawdown in the NASDAQ’s largest names rises, the S&P 500 more and more finds itself vulnerable to headline risk and macro surprises.
Major Index Performance as of July 2, 2025
- S&P 500 (SPY): 620.45 USD | ▲ +0.44%
- Nasdaq (QQQ): 550.80 USD | ▲ +0.70%
- Russell 2000 (IWM): 221.03 USD | ▲ +1.35%
- Dow Jones (DIA): 444.71 USD | ▼ -0.05%
Gold Price
Gold at around $3,352 per ounce at midday Thursday, July 3, 2025, maintains the upper limit with macro and political risk remaining a worrying factor. President Trump’s refusal not to grant an extension to the July 9 trade deadline and his outright distaste for a Japanese deal has reinforced the threat of redoubling tariff threats and dollar weakening that underlies the safe-haven attractiveness of gold. There is also the extra geopolitical tension in the form of a proposed Israel-Hamas cease-fire that would run for 60 days. The market is also contending with the Trump omnibus policy bill that passed the Senate on a tiebreaker and triggering expectations for monolithic fiscal changes.
Today’s lineup of planned economic announcements—Average Hourly Earnings, Non-Farm Employment Change, Unemployment Rate, Unemployment Claims, and ISM Services PMI—will be of absolute importance for determining near-term gold direction. If jobs and wage numbers surprise to the upside, this would be dollar supportive and force yields upward, placing near-term pressure on gold. The opposite, softer labour data, would continue to fuel economic slowdown anxiety, forcing gold upward as investors seek refuge. Yesterday’s surprise ADP print was a 33,000 job loss, confirming labour market weakness concerns. Combined with slowing pace of hiring and weakening wage momentum, overall sentiment has shifted risk-off—gold bullish as an inflation hedge and volatility anchor. With increased market sensitivity, gold still resides between a potential $3,400 resistance test and fallback support in the $3,300–$3,250 range, waiting for this morning’s data result.
Oil Prices
Currently, the oil is trading at around $65.40 a barrel for WTI and $67.30 for Brent in a tight range prior to today’s highly anticipated OPEC+ meeting. Players are looking for a potential production adjustment with a lean toward a modest production increase for the month of August. That is constraining upside pressure for the time being. On the supply side, news of the tightening at veteran American wells and yet another Cushing inventory draw is supporting a modest bullish tilt. Inventory numbers have contributed to near-term volatile movements as well, although there is caution ahead as players will be looking for confirmation from OPEC+ in the form of forward guidance.
Trump’s reluctance to roll the July 9 trade deadline and his skepticism about a Japan deal have raised fears about world trade flows and created the kind of uncertainty that manifests itself directly in the energy markets. His legislative wins and tariff hawkishness supply an inflation risk premium that heightens the defensive allure of oil. Yesterday’s soft labour numbers, especially the ADP’s disappointing loss of 33,000 jobs, added to the ambiguity—hinting at lower demand expectations which counter-intuitively can support oil in the short term by reducing the risk of Fed-induced aggressive tightness. Today’s impending releases—nonfarm payrolls, ISM Services PMI, and wage readings—will be the clincher. A strong read will tend to lift the dollar and put crude at the backfoot but a miss will tend to support prices by confirming demand susceptibility and delaying Fed intervention. With the market tightly wound up in this configuration, oil remains highly susceptible to macro signals and geopolitical momentum.
Bitcoin Prices
Bitcoin is trading at around $108,849 now, its rally in the mid-$100,000s as sentiment within the crypto space reaches a new phase of bullishness. This latest bullishness follows a cascade of high-profile announcements: MicroStrategy’s recent purchase of 4,980 BTC—raising its inventory to 597,325 BTC—fits into mounting institutional appetite, while Fidelity buying over 10,000 ETH foreshadows increased confidence from the mainstream. Together with pro-crypto talk from the direction of the White House—be it the formation of a strategic bitcoin reserve or a call for deregulation—these announcements have underpinned investor confidence. ZeroHedge analysis suggests that listed companies are buying more Bitcoin than ETFs in the third quarter, a sign that demand is coming from strategic treasury placement rather than outright speculative flows.
Softer labor data yesterday, specifically ADP’s job contraction surprise and moderation of hiring growth, eased risk appetite and sparked a typical “bad news is good news” sentiment for Bitcoin, as investors rebalanced out of interest-rate sensitive risk assets and into digital alternatives. Today’s labor prints—specifically Non-Farm Payrolls and ISM Services PMI—are in play; softer prints would sustain the dovish narrative, and by extension give Bitcoin another leg into existing range consolidation. Firm prints will harden the dollar and the bonds, however, and temporarily stress BTC. Bitcoin continues to be ranged in a tight band at $108K-110K with breakthrough catalysts most likely to be either institutional treasury flows, macro economic shock, or additional regulatory clarification.
ETH Prices
Ethereum (ETH) is trading around $2,569, with intraday action going as high as $2,606 and as low as $2,395. The price action this week is being fueled by a mix of steady institutional demand and unstable whale action. Spot Ethereum ETFs saw $40.7 million of net inflows on July 1 alone, and the ETF flows total sits at $1.5 billion year-to-date 2025. The steady institutional buying pressure is enabling ETH to find price support in the mid-$2,500 levels in spite of continued macro uncertainty and digital asset rotation in the crypto market.
In the meantime, the activity from the whales is adding another level of complexity. On-chain indicators depict 95% net flows into large holders indicating strong accumulation trends. One major whale did transfer $237 million worth of ETH to exchanges, which is an indication of near-term selling pressure or profit-taking. Large wallet addresses currently hold nearly 27% of available supply, confirming upside potential for the coin while making the coin susceptible to intraday whipsaws. From a market structure perspective, Ethereum is still consolidating—leaning against a support floor of around $2,400 and upside potential in the range of the $2,800 to the $3,000 range—acting predominantly to ETF momentum and liquidity flows by the whales.
