Stock Market Update Thursday July 10, 2025

Stock Market Update Thursday July 10, 2025 Equity markets kicked off the session with selective profit-taking, particularly in software and high-beta tech stocks, which initially pressured the Nasdaq into negative territory. However, broad-based dip-buying emerged mid-session, fueling a steady rotation across sectors and lifting the S&P 500 (SPX) to a fresh intraday all-time high of 6,290. A bout of late-session selling pressure pared gains slightly, bringing the SPX back to Thursday’s former record closing high, but it still managed to notch a marginal new closing high at 6,980, up 0.3% on the day.

Meanwhile, the Nasdaq 100 (QQQ) slipped 0.2% amid ongoing weakness in tech, while small caps, as represented by the Russell 2000 (IWM), outperformed with a 0.5% gain, signaling renewed risk appetite beneath the surface.

Away From Stocks: Treasury yields were little changed across the curve, reflecting a steady macro backdrop. Commodities saw mixed action:

• WTI crude softened below $67 per barrel,

• Gold climbed to $3,324/oz,

• Bitcoin surged past $113,000, hitting another record high, and

• The VIX remained subdued, closing below 16, suggesting continued complacency in volatility markets.

Tariff Headlines Fail to Derail Risk Rally

Equity markets continued their upward trajectory despite a fresh round of protectionist measures, including a 50% tariff on Brazilian imports and new duties on copper and pharmaceutical goods. Market participants largely discounted the inflationary impact of the new trade restrictions, viewing them as short-term noise rather than a material threat to the macroeconomic backdrop. The focus remains squarely on earnings strength and key economic indicators, with inflation expectations still anchored for now.

AI and Airlines Propel Sector Rotation

A powerful sector rotation is underway, driven by AI exuberance and a rebound in airline earnings. Nvidia made history by surpassing a $4 trillion market capitalization, reinforcing the leadership of mega-cap tech. Meanwhile, Delta Air Lines beat consensus expectations and reinstated full-year guidance, catalyzing a broad rally in transportation stocks.

The rotation favored value and small-cap equities, which outperformed growth as investors sought exposure to undervalued cyclical plays amid shifting macro narratives.

Fed Watch: Labor Data Strengthens Case for Caution

Initial jobless claims declined to 227,000, reinforcing a narrative of labor market resilience and reducing urgency for immediate policy easing. Meanwhile, FOMC minutes revealed a divided committee, with ongoing debate around the timing and scope of potential rate cuts in the face of tariff-driven inflation risks.

Despite the Fed’s cautious tone, markets are increasingly pricing in a 25 basis-point cut in September, reflecting growing confidence in disinflation trends and anticipation of a soft landing scenario.

Quantitative Tightening Progress Report

The Federal Reserve’s balance sheet normalization continues at a measured pace. As of the latest data, Reserve Bank credit remains essentially unchanged on the week, holding steady at $6.613 trillion. On a month-over-month basis, the Fed's portfolio of interest-bearing securities — which includes Treasurys and agency MBS — has declined by approximately $14 billion. Cumulatively, the Fed’s holdings have now contracted by 25.8% from their peak level in early 2022, underscoring the continued implementation of Quantitative Tightening (QT). This balance sheet reduction reflects the ongoing runoff of maturing securities without reinvestment, aligned with the Fed's goal of tightening financial conditions without abrupt market disruption.

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June FOMC Minutes: A Cautious Policy Stance with Conditional Flexibility

The June 2025 FOMC minutes reflected a data-dependent stance, with most participants indicating that rate cuts could be appropriate later this year—contingent on further disinflation or a material softening in labor market conditions. Policymakers broadly acknowledged ongoing economic resilience, characterized by robust GDP growth, historically low unemployment, and steady consumer expenditure.

While newly announced tariffs were flagged as a potential inflationary impulse, views varied on whether their impact would be transitory or more entrenched. Labor dynamics showed signs of stabilization, with slower hiring momentum and a deceleration in layoffs, signaling a potential inflection point in the cycle.

Though a minority of participants expressed openness to a near-term easing move, others saw no justification for rate cuts, citing persistent inflation risks and sustained economic momentum. Overall, the tone suggests the Fed is not yet ready to pivot, but remains nimble and prepared to act should macro conditions warrant a change in the policy trajectory.

Trade Policy Developments: Post-Tariff Deadline Fallout

Earlier this month, I highlighted three macro catalysts to monitor. The first was the July 9 tariff exemption deadline, which has now passed. President Trump has begun notifying countries of revised trade terms, with official letters dispatched to eight nations initially.

Among these, seven countries—including Sri Lanka and the Philippines—face adjusted tariff schedules effective August 1. For five of them, proposed tariffs are lower than the April 2 levels, while Brunei and the Philippines will see increases. Notably, Brazil stands out with a dramatic tariff hike from 10% to 50%, which President Trump attributed to the Brazilian Supreme Court’s secret censorship orders targeting social media platforms.

The scope appears broader, with similar communications reportedly sent to 90 countries. Of the 22 countries reviewed by our team, 18 will receive improved or unchanged terms, while only the Philippines and Brazil are facing materially less favorable conditions.

Fed Policy Outlook: Divided Views Ahead of July Decision

The second key event is the upcoming FOMC meeting on July 29–30. While that’s still weeks away, the just-released June minutes offer a glimpse into internal dynamics. Per Fed watcher Nick Timiraos, policymakers fall into three broad camps:

1. Those advocating for cuts later this year, but not in July

2. Those arguing for no rate cuts at all

3. A minority favoring an immediate rate cut at the next meeting

Talk of inflation has moderated to the lowest level since the December 2024 meeting, though tariff-induced inflation remains a wildcard. The upcoming June CPI print next week will be critical in shaping expectations.

Seasonality may also offer support: July has historically delivered strong equity returns, especially in the first year of a presidential term. Market behavior in 2025 is closely tracking this historical pattern, reinforcing the view that July could be favorable for equities.

Bottom Line:

Broad-Based Technical Strength Suggests Bullish Outlook For July With all five major U.S. equity indices currently registering weekly buy signals, the market setup remains structurally bullish. We anticipate any pullbacks to be shallow and met with swift dip-buying activity, reinforcing the prevailing uptrend. The breadth of participation is particularly notable—broad sector rotation and upside momentum are supporting the latest push to all-time highs for the S&P 500 (SPX) and Nasdaq-100 (QQQ), with both the Dow Jones Industrial Average (DJIA) and equal-weighted S&P 500 (RSP) positioned to potentially confirm new highs in the coming week. This type of broad-based expansion across market cap and sector exposures strengthens the bull case and suggests durable internal support for the rally. Sentiment is gradually shifting, with investors beginning to re-engage and increase risk exposure. While this uptick in optimism reflects growing confidence in the trend, current positioning and sentiment readings are not yet at levels typically associated with euphoria or overbought extremes. As such, we do not yet see the conditions necessary for a market top, but sentiment will remain a key variable to monitor in the sessions ahead.

The S&P 500 Equal Weight ETF (RSP) signaled a buy alert for the weekly chart on Thursday July 3, 2025 chart; now we have all five major indexes with confirmed buy signals on both a daily and weekly basis. Our next W.D. Gann Cycle Pivot Date will be released later this month. You can find out more in our premium Discord channel. On June 9, 2025, our proprietary algorithm has issued weekly buy signals across four of the five major U.S. equity benchmarks—the S&P 500 (SPY), Nasdaq-100 (QQQ), Russell 2000 (IWM), and Dow Jones Industrial Average (DIA). Tuesday, April 29, 2025, we have IWM & RSP ETFs; the two are the most important indexes to give buy signals. Now, we have all five major indexes with buy signals generated from our proprietary algorithm. Monday, April 28, 2025, we had a buy signal generated from our proprietary algorithm for the Dow Jones ETF DIA on the daily chart. The market structure continues to improve, breadth thrusts confirm internal strength, and technical conditions suggest that while short-term upside could be capped, the path of least resistance remains higher. April 25, 2025, Technical Outlook: SPY, QQQ, and DIA have daily buy signals. Sector ETFs (XLK, AIQ, SMH, XLY) have triggered buy signals. April 24, 2025, as do Bitcoin, and VIX has a daily sell signal (bullish for equities).