The Beach Boys, led by the late, great Brian Wilson, liked to sing about good vibrations. That’s certainly what investors are feeling as the second quarter ends and the summer heats up.
The S&P 500 and Nasdaq both finished last week at record highs, erasing the big drops that followed sweeping U.S. tariffs in April. The question is whether these vibes are as good as they get—or if there’s room for
stocks to climb even higher.
On trade, things are looking up. Talks with Canada are back on track after the U.S.’s biggest export market rescinded a digital services tax that would have hit Amazon, Google-parent
Alphabet, and Facebook-owner Meta Platforms. The July 9 deadline for new trade deals may not be that firm, the White House said last week.
President Donald Trump’s signature budget bill is making its way through the Senate, and the tax cuts it contains could provide a boost for corporate earnings—but not for solar energy, which hasn’t been invited to the party. The economy isn’t doing too badly. The June jobs report, out Thursday this week instead of Friday because of the July 4 holiday, is expected to show companies are still hiring.
And there is some hope of a Federal Reserve interest-rate cut as soon as the July 30 decision. Chair Jerome Powell will speak on a panel in Sintra, Portugal on Tuesday.
But it’s not all sunshine ahead. While the impact of tariffs has yet to make a big dent
on corporate earnings, that may well change in the second half. A good test will be earnings from Constellation Brands Tuesday. Its Modelo brand is the best-selling beer in the U.S.
overtaking Bud Light. It’s made in Mexico, and the brewer’s stock was one of the first to be hit by trade fears, so its outlook will be a good sign of what lays ahead in the new quarter.
After the chaos of the first half of the year, there are reasons to believe stocks can enjoy a smoother ride over the rest of 2025.
Wouldn’t it be nice.
—Brian Swint
*** Join Barron’s senior managing editor Lauren Rublin and deputy editor Ben Levisohn today at noon when they size up the outlook for stocks, bonds, energy, gold, and more. We welcome your questions. Sign up here.
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Senate Debates Spending Megabill As Deadline Looms
The Senate was debating the megabill after narrowly advancing it, though Democrats have cried foul about the GOP’s use of an accounting tactic to ram the bill through on a simple majority vote. Democrats delayed a vote by forcing the 940-page bill read aloud, but lawmakers could wrap it up today.
- The nonpartisan Congressional Budget Office estimated 11.8 million more people will lose health insurance by 2034 and that the current Senate bill would raise deficits by $3.3 trillion. Republicans argue the extension of the 2017 tax cuts in the current bill doesn’t affect the federal budget.
- Republicans hope to push the bill through while avoiding the 60-vote filibuster rule. Democrats are calling their tax cut accounting “fake math” and a “gimmick” to mask the true cost of the bill. Lawmakers are rushing to get something to President Donald Trump’s desk by Friday.
- North Carolina Republican Sen. Thom Tillis joined Kentucky Sen. Rand Paul in opposing advancing the bill to debate, but Tillis was the one who caught heat from Trump, who threatened him with a primary challenger. Tillis said Sunday he wouldn’t seek reelection, something Trump celebrated on social media.
- The Senate bill would end credits for large-scale wind and solar projects that aren’t operational by 2027, plus end credits for electric vehicles and residential solar panels, and impose a new tax on projects containing Chinese components. Tesla CEO Elon Musk called it “Utterly insane and destructive.”
What’s Next: Connecticut Democrat Sen. Chris Murphy told NBC News that there’s a chance that the megabill won’t pass. Some Republicans are unhappy with the bill’s budgetary effects. The House
Freedom Caucus says the Senate version adds $1.3 trillion to the deficit, $651 billion more than an agreed budget framework.
—Liz Moyer, Janet H. Cho, and Avi Salzman
Jobs Data Coming This Week As Market Watches Fed
Economic data this week could help Federal Reserve officials decide their next interest rate move—whether to push for another cut sooner rather than later. Much could depend on the only jobs report left before the Fed’s July meeting. That report comes out Thursday during a holiday-shortened trading week.
- Jobs growth has cooled this year, but the labor market is still solid, Fed Chairman Jerome Powell has said. But a particularly weak jobs report could tilt the balance of risks to the employment side of the Fed’s dual mandate.
- The Institute for Supply Management’s
Purchasing Managers’ Index, due out on Tuesday, is expected to show a reading of 48.8. That would be roughly even with the May reading. On Thursday, its services PMI for June is expected to read 50.5, slightly higher than May.
- Tuesday’s Job Openings and Labor Turnover Survey is expected to show that there were 7.3 million
job openings on the last business day of May, nearly 100,000 fewer than in April. And ADP’s private payroll report on Wednesday is expected to show a gain of 88,000 jobs, after a gain of 37,000 in May.
- Thursday’s jobs report for June is expected to show employers added 113,000 nonfarm jobs, after a 139,000 increase in May. Jobs growth has averaged 123,800 a month so far this year, down from the average 191,900 the previous two years.
What’s Next: The unemployment rate is expected to rise to 4.3% from 4.2%. While traders see the Fed’s next interest cut as likely to happen at the September meeting, an especially weak jobs report could put a July rate-cut into play.
—Dan Lam
U.S.-Canada Trade Talks Restart After Tech Tax Scrapped
Trade negotiations with Canada, the second-biggest U.S. trading partner after Mexico,
are back on. The two countries will try to reach an agreement later this month, after Canada ditched a digital services tax that President Donald Trump cited when he called an abrupt end to talks on Friday.
- Canada’s Prime Minister Mark Carney said Sunday that both nations will resume talks and work toward a deadline of July 21. Trump also agreed to restart negotiations, The Wall Street Journal reported.
- To bring the U.S. back to the table, Carney said Canada wouldn’t collect a digital services tax that was due to start Monday. Trump terminated discussions Friday, calling the tax a “direct and blatant attack” on U.S. technology companies, in a post on Truth Social.
