It was quite the week for the stock market, to say the least. The start of the second half of the year kicked off with both the S&P 500 and NASDAQ hitting multiple all-time highs, despite having a shortened trading day due to a holiday on July 4th. Nvidia, a standout company, continued its remarkable recovery since April and reached a market value of over $3.9 trillion—an increase that surprised many as its shares climbed to $159.34, reflecting a market cap of $3.89 trillion.
To really grasp the enthusiasm on Wall Street, it’s worth looking back at the tumultuous second quarter that just wrapped up. Remember when the Nasdaq plummeted more than 12% in just the first week due to tariff news from President Trump? It’s striking to see it recover to a 17.75% gain from April to June—marking the best quarterly performance since those early days of the pandemic, even outshining the 30% uptick in Q2 of 2020 when interest rates were slashed to stave off economic disaster.
In the meantime, the S&P 500 climbed back from a 10.57% increase in the second quarter of this year, a noticeable shift from its 11% drop noted earlier in April. The Board Market Index also recorded its best quarter since the end of 2023, rising by 11.24%. Technology led the charge with a substantial 23.5% gain, while the energy sector struggled, dropping 9.37%—its worst quarterly performance since the third quarter of 2020, largely due to stagnant oil prices amidst geopolitical tensions, especially related to Iran.
Amid these market dynamics, major announcements, especially from Trump regarding trade deals like the one with Vietnam, bolstered the S&P 500 and Nasdaq, both climbing by 1.7% and 1.6%, respectively. Furthermore, Capitol Hill is gearing up for a significant legislative triumph, which might potentially benefit the president’s agenda, especially with impending tax cuts on the horizon.
Interestingly, a robust employment report released Thursday had a mixed impact. On one hand, rising employment figures combined with a decrease in unemployment rates seemed to signal a resilient economy amidst tariff concerns. This would typically be a win for Trump. However, the strength of the economy also complicates discussions around potential Federal Reserve interest rate cuts. Just the day before the employment data came out, Trump had posted on social media suggesting that Federal Reserve Chair Jerome Powell should resign.
The June report indicated payroll grew by 147,000 jobs, which was significantly higher than the Dow Jones estimate of 110,000. The unemployment rate for June found itself at 4.1%, contrary to expectations of an uptick to 4.3%. But, it’s worth noting that this decrease can be partially explained by fewer individuals actively seeking employment. Average hourly wages increased by 3.7%, slightly below the previous month’s 3.8% rate.
This week also brought some positive updates from banks, as they resumed updates to their capital allocation plans following the conclusion of the Fed’s stress tests. Notably, Goldman Sachs and Wells Fargo stood out with both announcing hikes in their dividends—Goldman by 33% to $4 per share, and Wells Fargo by 12.5% to 45 cents per share. The lifting of the Fed’s asset cap also signaled encouraging news for Wells Fargo.
In an engaging segment earlier this week, Jim Cramer interviewed Amazon’s CEO Andy Jassy on “Mad Money.” Jassy discussed exciting opportunities in artificial intelligence and long-term projects like the Kuiper Satellite Internet Service, which Jim believes could help bolster Amazon’s Prime membership.
In other corporate news, Home Depot declared its intention to acquire GMS, a building materials distributor, for about $5.5 billion. Jim pointed out that while it makes sense for Home Depot to expand into the professional contracting space, the substantial acquisition may not yield the best value for shareholders.
Lastly, the S&P’s indicators on Thursday moved further into overbought territory, now sitting at 8.25%. While markets can sustain this buying trend for a while, it’s advisable to consider raising cash at these levels. As always, Cramer’s charitable trusts have long positions in stocks like NVDA, AMZN, Meta, and HD, and if you’re part of his investment club, you’re notified ahead of any trades he makes.
