Profit Insights

### U.S. Equity Markets Close at Record Highs
U.S. equity markets rallied on July 3, 2025, with the S&P 500, Nasdaq Composite and the Dow Jones Industrial Average all closing at or near record levels. The S&P 500 climbed 0.83% to 6,279.35, while the Nasdaq Composite rose 1.02% to 20,601.10, both marking fresh closing highs. The Dow advanced 344.11 points, or 0.77%, ending at 44,828.53, just 0.41% shy of its own all-time peak. Tech shares led gains, with Nvidia approaching a $4 trillion market capitalization after rising 1.3%, and chip-design names Synopsys and Cadence Design spiking following eased export restrictions to China. Trading volumes were subdued in the shorter session ahead of the July 4 holiday, with U.S. exchanges logging 10.85 billion shares, well below the 20-day average of 17.82 billion shares ([reuters.com](https://www.reuters.com/world/china/global-markets-wrapup-1-2025-07-03/), [reuters.com](https://www.reuters.com/sustainability/sustainable-finance-reporting/us-stock-futures-steady-investors-await-payrolls-data-2025-07-03/)).

### Labor Market Shows Resilience, but Underlying Weakness
The Labor Department’s June nonfarm payrolls report, released a day early due to the Independence Day holiday, showed an addition of 147,000 jobs—35% above economists’ forecasts of 110,000—while the unemployment rate dipped to 4.1% from 4.2% in May. However, nearly half of the gains stemmed from government hiring, and private-sector job creation was the slowest in eight months at 74,000. Average hourly earnings rose 0.2% for the month, translating to a 3.7% year-on-year increase, in line with levels consistent with the Fed’s 2% inflation goal. Meanwhile, the average workweek shortened to 34.2 hours, hinting businesses may be curbing hours rather than headcount amid tariff-related uncertainty. Labor force participation fell to 62.3%, partly driven by discouraged jobseekers exiting the market. Economists warn that these mixed signals mask a gradual loss of momentum in the broader job market ([reuters.com](https://www.reuters.com/world/us/us-job-growth-expected-slow-june-unemployment-rate-forecast-rise-2025-07-03/), [reuters.com](https://www.reuters.com/business/traders-pare-bets-fed-rate-cuts-after-jobs-report-2025-07-03/)).

### Federal Reserve Outlook and Rate-Cut Expectations
Thursday’s unexpectedly solid jobs data significantly reduced market expectations for an imminent rate cut by the Federal Reserve. CME Group’s FedWatch tool showed the probability of a July rate reduction virtually evaporated, while bets on a September cut fell to around 68%. Atlanta Fed President Raphael Bostic cautioned that it may take a year or more for the U.S. economy to adjust to sweeping tariffs and other policies, suggesting a prolonged period of “elevated inflation readings” that would keep the Fed on hold. Traders are now pricing in just two quarter-point cuts by year-end, down from three cuts anticipated a week earlier. Fed officials, including Governors Christopher Waller and Michelle Bowman, had recently advocated for earlier action, but the June payrolls report undercut that view and bolstered arguments for patience ([reuters.com](https://www.reuters.com/business/traders-pare-bets-fed-rate-cuts-after-jobs-report-2025-07-03/), [reuters.com](https://www.reuters.com/world/middle-east/dollar-drifts-traders-hunker-down-us-payrolls-2025-07-03/)).

### Key Economic Indicators: Factory Orders, Trade Deficit and ISM Services
On the goods-producing side, U.S. factory orders rebounded strongly in May, surging 8.2% driven by a 230.8% jump in commercial aircraft orders amid robust airline fleet upgrades. Orders for non-defense capital goods excluding aircraft—which proxy business investment plans—rose 1.7%, signaling continued corporate spending on equipment. Despite these gains, manufacturing overall remains constrained by tariff-induced cost pressures and policy uncertainty. Meanwhile, the U.S. trade deficit widened sharply in May to $71.5 billion, an 18.7% increase from April, as exports fell 4.0% to $279.0 billion while imports eased 0.1% to $350.5 billion. The deficit’s drag on first-quarter GDP was significant, and although a reversal is expected in Q2, analysts caution that tariff distortions may linger. Complementing these data, the ISM services PMI showed a pickup in overall activity in June even as services-sector employment contracted for the third time this year, underscoring uneven strength across the economy ([wsau.com](https://wsau.com/2025/07/03/us-factory-orders-rebound-in-may-on-strong-aircraft-demand/?utm_source=chatgpt.com), [reuters.com](https://www.reuters.com/world/us/us-trade-deficit-widens-may-weak-exports-2025-07-03/)).

### Currency and Fixed Income Moves
The U.S. dollar strengthened across the board on July 3, with the dollar index up 0.40% to 97.12, its second consecutive daily gain after nine straight sessions of declines. The greenback rose 0.94% against the yen to 145.075 and 0.39% against the Swiss franc at 0.7955, while the euro weakened 0.37% to $1.1754. Treasury yields spiked in tandem: the 2-year note yield jumped 9.7 basis points to 3.886%, and the 10-year yield climbed 5.3 basis points to 4.346%, reflecting the diminished odds of near-term Fed easing and a repricing of interest-rate expectations. Market participants now assign a 95.3% probability to rates remaining unchanged at the July 29-30 Fed meeting, up markedly from 76.2% a day earlier ([reuters.com](https://www.reuters.com/world/middle-east/dollar-drifts-traders-hunker-down-us-payrolls-2025-07-03/), [reuters.com](https://www.reuters.com/world/china/global-markets-wrapup-1-2025-07-03/)).

### Company-Specific Highlights
Beyond broad indices, several corporate stories stood out on July 3. Online travel site Tripadvisor surged 16.7% on a Wall Street Journal report that activist firm Starboard Value had accumulated a stake exceeding 9%. Cloud-monitoring specialist Datadog jumped 14.9% after it was slated to replace Juniper Networks in the S&P 500 on July 9. Tech heavyweight Nvidia’s market cap neared $4 trillion, on track to overtake Apple’s record valuation, as shares rose 1.3%. In after-hours trading, Apple shares dipped 4% after CEO Tim Cook warned that U.S. tariffs could add $900 million in costs to the June quarter, while Amazon fell 2.5% following a mixed cloud-revenue report and a below-forecast forecast for operating income. Broader tech gains during the regular session—led by Microsoft’s 7.6% jump and Meta’s 4.2% rise—reflect continued investor optimism around AI spending and megacap performance ([reuters.com](https://www.reuters.com/sustainability/sustainable-finance-reporting/us-stock-futures-steady-investors-await-payrolls-data-2025-07-03/), [tradingview.com](https://www.tradingview.com/news/reuters.com%2C2025%3Anewsml_L1N3R90XQ%3A0-apple-amazon-shares-slip-after-hours-tech-shares-jump-earlier/?utm_source=chatgpt.com)).

### Commodities: Oil and Other Markets
Commodity markets were relatively muted on July 3. U.S. crude oil futures slipped 0.65% to $67.01 a barrel, while Brent crude eased 0.46% to $68.79, pressured by worries over global growth and mixed economic data. The drop in oil prices accompanied the rise in Treasury yields and dollar strength, as investors weighed the implications of a resilient U.S. labor market and delayed Fed easing on demand prospects. Gold prices also retreated slightly amid the firmer dollar and higher real yields, tempering haven demand ahead of the long holiday weekend ([reuters.com](https://www.reuters.com/world/china/global-markets-wrapup-1-2025-07-03/), [reuters.com](https://www.reuters.com/world/china/global-markets-wrapup-1-2025-07-03/)).

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Sources:
Reuters: turn1view0, turn2view0, turn4view0, turn5view0, turn6view0, turn7view0, turn8search2, turn3search0