Market View Weekly - 7/1/2025

brought to you by Philip Blancato, Osaic's Chief Market Strategist

ECONOMIC REVIEW1

• The Conference Board Consumer Confidence Index in June fell below expectations of 99.5 to a reading of 93.
  • The new report showed that consumers continue to feel nervous about potential impacts from tariffs on the job market and business conditions.
• The final estimate of the first quarter Gross Domestic Product (GDP) report showed that U.S. economic growth slowed by -0.5% on an annualized basis, compared with the -0.2% reading in the previous report.
  • The weaker-than-expected report was mostly due to lower business inventories and people spending less on services.
• The Personal Consumption Expenditures Price Index (PCE) increased 0.1% month-over-month (MoM), matching expectations. Core PCE, which excludes the volatile food and energy categories, increased 0.2% MoM.
  • On a year-over-year (YoY) basis, headline PCE rose 2.3% and core PCE rose 2.7%.
  • Personal income fell by -0.4%, mostly due to one-time lower Social Security payments and a drop in farm income. Importantly, private sector wages rose by 0.4%.
  • Personal spending dropped by -0.1% but was largely impacted by lower car sales after a surge in purchases ahead of new tariffs.
• New home sales fell below expectations, dropping by 13.7% MoM and 6.3% in the last year. Meanwhile, existing home sales rose 0.8% MoM but declined 0.7% YoY.

How does the most recent economic data impact you?

• Consumer confidence readings in June gave back some of the improvement seen in May. While tariff concerns still weigh on consumer sentiment, positive wage growth, steady retail sales numbers, and stable job growth indicate the economy is sound.
• Inflation has continued trending towards the Federal Reserve’s (Fed) 2% target, although next month there may be more volatility in prices as tariffs were fully in effect throughout June. Unless there is a significantly weaker labor report this week, the Fed is likely to remain cautious and wait for more inflation data over the next few months before cutting interest rates.

A LOOK FORWARD1

• In the shortened holiday week, investors will be primarily focused on economic reports that provide updated information on the jobs market in June and the strength of the U.S. manufacturing and services sectors.

How does this week’s slate of economic data impact you?

•  The labor market has played a key role in supporting consumer spending and has stayed strong despite early-year uncertainty. The upcoming jobs report will be closely watched for signs of whether tariffs have affected hiring. If job growth comes in weaker than expected, it could give the Fed more reason to lower interest rates.
• The ISM Services Index measures how healthy the U.S. services sector is, which makes up nearly 80% of U.S. economic activity. The index slipped slightly into contraction territory last month but has been solidly positive for the last year. Investors will be watching for a healthy rebound.

MARKET UPDATE2

 OBSERVATIONS

• Major U.S. stock indexes continued moving higher last week, with the S&P 500 and Nasdaq reaching new all- time highs.
  • The Nasdaq led the advance with a +4.25% gain, while the S&P 500 returned +3.45%, and the Dow Jones finished up 3.83%.
• Small-cap stocks also experienced strong performance for the week but underperformed large-caps with a +3.01% return. Mid-cap stocks also participated in the rally, rising +2.22% on the week.
• International markets also saw gains but trailed the S&P 500. Developed markets advanced +3.10% while emerging markets posted a return of +3.35%.
• Domestic and international fixed income indices were positive for the week as interest rates declined. The U.S. Aggregate Bond Index returned +0.68% and high yield corporate bonds climbed +0.81%.

BY THE NUMBERS

• Sweeping Tax-cut, Spending Bill Clears First U.S. Senate Hurdle³: The Republican-controlled U.S. Senate narrowly advanced President Donald Trump's, sweeping tax-cut and spending bill on Saturday, during a marathon weekend session marked by political drama, division and lengthy delays as Democrats sought to slow the legislation's path to passage. Lawmakers voted 51-49 to open debate on the 940-page mega bill, with two of Trump's fellow Republicans joining Democrats to oppose the legislation that would fund the president's top immigration, border, tax-cut and military priorities. Lawmakers will begin up to 20 hours of debate on the legislation. That will be followed by a marathon amendment session, known as a "vote-a-rama" before the Senate votes on passage. Lawmakers said they hoped to complete work on the bill on Monday. If the Senate passes the bill, it will then return to the House of Representatives for final passage before Trump can sign it into law.
• Millions of 4^th of July Travelers Face Potential Delays Across U.S.⁴: Fourth of July travelers are in for traffic and flight delays this week as a cold front pushing across the US is forecast to bring storms to the eastern half of the country. This could culminate in a washout on July Fourth for the Southeast. AAA is predicting a record-breaking 72.2 million Americans will travel for the holiday, due in part to America’s birthday falling on a Friday this year, creating a three-day weekend. The National Hurricane Center tagged an area to watch off the Southeast coast later this week, with some possible development heading into the holiday weekend. Regardless of any development, tropical downpours are likely for Florida.

Economic Definitions

Conference Board Consumer Confidence Index: The Consumer Confidence Survey® reflects prevailing business conditions and likely developments for the months ahead. This monthly report details consumer attitude, buying intentions, vacation plans and consumer expectation for inflation, stock prices and interest rates. Data are data available by age, income, region and top 8 states.

Existing Home Sales: This concept tracks the sales of previously owned homes during the reference period. Total existing home sales include single-family homes, townhomes, condominiums, and co-ops. All sales are based on closings from Multiple Listing Services.

Federal Reserve (Fed): The Federal Reserve System is the central banking system of the United States of America.

GDP: Gross domestic product (GDP) measures the final market value of all goods and services produced within a country. It is the most frequently used indicator of economic activity. The GDP by expenditure approach measures total final expenditures (at purchasers' prices), including exports less imports. This concept is adjusted for inflation.

ISM Manufacturing Index: PMI Surveys track sentiment among purchasing managers at manufacturing, construction and/or services firms. An overall sentiment index is generally calculated from the results of queries on production, orders, inventories, employment, prices, etc.

ISM Services Index: PMI Surveys track sentiment among purchasing managers at manufacturing, construction and/or services firms. An overall sentiment index is generally calculated from the results of queries on production, orders, inventories, employment, prices, etc. Target Audience: supply management professionals Sample Size: 300 individuals Date of Survey: through the month The Services Index is a composite index of four indicators with equal weights: Business Activity, New Orders, Employment and Supplier Deliveries. An index reading above 50% indicates an expansion and below 50% indicates a decline in the non-manufacturing economy. Whereas per Supplier Deliveries Index, above 50% indicates slower deliveries and below 50% indicates faster deliveries.

New Home Sales: This concept tracks sales of newly constructed homes during the reference period. The Implicit US index is calculated by dividing the number of houses sold in the US by the seasonally adjusted number of homes sold in the US.

Nonfarm Payrolls: This indicator measures the number of employees on business payrolls. It is also sometimes referred to as establishment survey employment to distinguish it from the household survey measure of employment.

Personal Consumption Expenditures PCE (headline and core): PCE deflators (or personal consumption expenditure deflators) track overall price changes for goods and services purchased by consumers. Deflators are calculated by dividing the appropriate nominal series by the corresponding real series and then multiplying the result by 100.

Index Definitions

S&P 500: The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities and serves as the foundation for a wide range of investment products. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization.

NASDAQ: The NASDAQ Composite Index is a broad-based capitalization-weighted index of stocks in all three NASDAQ tiers: Global Select, Global Market and Capital Market. The index was developed with a base level of 100 as of February 5, 1971.

Dow Jones Industrial Average: The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally the leaders in their industry. It has been a widely followed indicator of the stock market since October 1, 1928.

Russell Mid-Cap: Russell Midcap Index measures the performance of the 800 smallest companies in the Russell 1000 Index, which represents approximately 25% of the total market capitalization of the Russell 1000 Index.

Russell 2000: The Russell 2000 Index is comprised of the smallest 2000 companies in the Russell 3000 Index, representing approximately 8% of the Russell 3000 total market capitalization. The real-time value is calculated with a base value of 135.00 as of December 31, 1986. The end-of-day value is calculated with a base value of 100.00 as of December 29, 1978.

MSCI EAFE: The MSCI EAFE Index is a free-float weighted equity index. The index was developed with a base value of 100 as of December 31, 1969. The MSCI EAFE region covers DM countries in Europe, Australasia, Israel, and the Far East.

MSCI EM: The MSCI EM (Emerging Markets) Index is a free-float weighted equity index that captures large and mid-cap representation across Emerging Markets (EM) countries. The index covers approximately 85% of the free float-adjusted market capitalization in each country.

Bloomberg Barclays US Agg Bond: The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government- related and corporate securities, MBS (agency fixed-rate pass-throughs), ABS and CMBS (agency and non-agency).

Bloomberg Barclays High Yield Corp: The Bloomberg Barclays US Corporate High Yield Bond Index measures the USD- denominated, high yield, fixed-rate corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch and S&P is Ba1/BB+/BB+ or below. Bonds from issuers with an emerging markets country of risk, based on Barclays EM country definition, are excluded.

Bloomberg Barclays Global Agg: The Bloomberg Barclays Global Aggregate Index is a flagship measure of global investment grade debt from twenty-four local currency markets. This multi-currency benchmark includes treasury, government-related, corporate and securitized fixed-rate bonds from both developed and emerging markets issuers.

Bloomberg Barclays Municipal Bond Index: The Bloomberg Barclays U.S. Municipal Index covers the USD-denominated long-term tax-exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds and prerefunded bonds.

Disclosures

The statements provided herein are based solely on the opinions of the Osaic Research Team and are being provided for general information purposes only. Neither the information nor any opinion expressed constitutes an offer or a solicitation to buy or sell any securities or other financial instruments. Any opinions provided herein should not be relied upon for investment decisions and may differ from those of other departments or divisions of Osaic Wealth, Inc. (“Osaic”) or its affiliates.

Certain information may be based on information received from sources the Osaic Research Team considers reliable; however, the accuracy and completeness of such information cannot be guaranteed. Certain statements contained herein may constitute “projections,” “forecasts” and other “forward-looking statements” which do not reflect actual results and are based primarily upon applying retroactively a hypothetical set of assumptions to certain historical financial information. Any opinions, projections, forecasts and forward-looking statements presented herein reflect the judgment of the Osaic Research Team only as of the date of this document and are subject to change without notice. Osaic has no obligation to provide updates or changes to these opinions, projections, forecasts and forward-looking statements. Osaic is not soliciting or recommending any action based on any information in this document.

Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect again loss. In general, the bond market is volatile; bond prices rise when interest rates fall and vice versa. This effect is usually pronounced for longer-term securities. Any fixed-income security sold or redeemed prior to maturity may be subject to a substantial gain or loss.

Vehicles that invest in lower-rated debt securities (commonly referred to as junk bonds or high-yield bonds) involve additional risks because of the lower credit quality of the securities in the portfolio. International investing involves special risks not present with U.S. investments due to factors such as increased volatility, currency fluctuation, and differences in auditing and other financial standards. These risks can be accentuated in emerging markets.

Index performance does not reflect the deduction of any fees and expenses, and if deducted, performance would be reduced. Indexes are unmanaged and investors are not able to invest directly into any index. Past performance cannot guarantee future results.

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 1 Data obtained from Bloomberg as of 6/27/2025.

2 Data obtained from Morningstar as of 6/27/2025.

³ Trump's sweeping tax-cut, spending bill clears first US Senate hurdle

⁴ 4th of July travelers face potential storm-related delays

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