Profit Insights

### Market Summary
On June 27, Wall Street extended its rally, sending the S&P 500 and Nasdaq Composite to all-time closing highs while the Dow Jones Industrial Average climbed 1.00% to 43,819.27. The S&P 500 rose 0.52% to 6,173.07, and the Nasdaq advanced 0.52% to 20,273.46, confirming the tech-heavy index’s entry into a bull market. All three major U.S. benchmarks posted weekly gains despite mixed trade news, marking a remarkable run driven by optimism over U.S.–China trade progress and growing bets on Federal Reserve rate cuts ([reuters.com](https://www.reuters.com/business/us-stock-futures-rise-rate-cut-hopes-ahead-inflation-data-2025-06-27/)).

### Key Drivers
Investor risk appetite was buoyed by reports of a U.S.–China agreement to expedite rare-earth shipments, easing supply-chain concerns in critical tech industries. At the same time, softer-than-expected economic data—including a contraction in consumer income and spending in May—reinforced expectations that the Fed will pivot to rate cuts later this year. According to CME’s FedWatch Tool, markets now price in a 76% probability of the Fed’s first rate reduction by September, with a smaller 19% chance for a July cut ([reuters.com](https://www.reuters.com/business/us-stock-futures-rise-rate-cut-hopes-ahead-inflation-data-2025-06-27/)).

### Sector and Corporate Highlights
Among the 11 major S&P 500 sectors, consumer discretionary led gains, buoyed by a 15.2% surge in Nike shares after a better-than-expected first-quarter revenue forecast. Energy stocks lagged as oil prices fell sharply on easing Middle East tensions. Chipmakers also performed well: Nvidia rose 1.8%, edging closer to a $4 trillion market capitalization on robust AI outlooks, and Micron’s upbeat forecast further bolstered confidence in semiconductor names ([reuters.com](https://www.reuters.com/business/us-stock-futures-rise-rate-cut-hopes-ahead-inflation-data-2025-06-27/)).

### Consumer Spending and Inflation
New Commerce Department figures showed U.S. consumer spending unexpectedly fell by 0.1% in May—the second decline so far in 2025—as front-loaded purchases ahead of tariffs unwound. Goods spending plunged 0.8%, driven by a 1.8% drop in durable goods outlays, while spending on services rose a modest 0.1%, its weakest gain since November 2020. Meanwhile, the Fed’s preferred inflation gauge, the Personal Consumption Expenditures Price Index, edged up 0.1% month-over-month and 2.3% year-over-year, with core PCE inflation (excluding food and energy) rising 0.2%, lifting the annual core rate to 2.7%. Personal income fell 0.4%, and the saving rate dipped to 4.5%. The Atlanta Fed cut its Q2 GDP forecast to 2.9% annualized, reflecting the impact of trade-related distortions on growth ([reuters.com](https://www.reuters.com/business/us-consumer-spending-falls-unexpectedly-may-2025-06-27/)).

### Consumer Sentiment
A University of Michigan survey cited in the spending report noted that consumer sentiment in June remained roughly 18% below its post-election peak in December, underscoring lingering concerns over tariffs and economic uncertainty. While sentiment improved modestly this month, households continued to brace for slower income growth and higher prices, factors that have restrained discretionary outlays despite resilient wage gains ([reuters.com](https://www.reuters.com/business/us-consumer-spending-falls-unexpectedly-may-2025-06-27/)).

### Fixed Income and Currency Markets
Bond investors trimmed duration bets as Treasury yields on shorter maturities edged higher following the inflation and spending data. Concurrently, the U.S. dollar slid to a fresh three-and-a-half-year low against the euro, reflecting growing confidence in a more dovish Fed later this year. These moves underscored a broad market view that monetary policy will remain accommodative once the lagged effects of tariffs on inflation become clearer ([reuters.com](https://www.reuters.com/business/us-consumer-spending-falls-unexpectedly-may-2025-06-27/)).

### Commodities & Energy Markets
Oil prices were set for their steepest weekly decline since March 2023, with Brent futures at $68.08 per barrel and U.S. West Texas Intermediate at $65.64, after an Israel-Iran ceasefire removed a significant risk premium and OPEC+ signaled continued supply growth. Options markets now imply only a 4% chance of major supply disruptions through the Strait of Hormuz, according to Goldman Sachs analysts. Analysts also point to an oversupplied market—about 2.1 million barrels per day—keeping prices under pressure despite tight U.S. inventories late in the week ([reuters.com](https://www.reuters.com/business/energy/oil-set-weekly-loss-fading-mideast-supply-risks-2025-06-27/?utm_source=chatgpt.com), [reuters.com](https://www.reuters.com/world/middle-east/oil-market-reflects-slim-chance-supply-disruption-goldman-analysts-say-2025-06-27/?utm_source=chatgpt.com)).

### Outlook
Investors will turn to next week’s key U.S. economic releases for further clues on inflation and growth. Highlights include the Chicago PMI on June 30 and the final ISM manufacturing and services surveys on July 1 and July 3. The combination of these data points will be critical for the Fed as it evaluates whether the U.S. economy is slowing sufficiently to warrant beginning rate cuts later in 2025 ([forex.tradingcharts.com](https://forex.tradingcharts.com/economic_calendar/2025-06-27.html?code=USD&utm_source=chatgpt.com)).