S&P 500 Rebounds Going into Fourth of July Holiday Weekend

The S&P 500 (Index: SPX) rebounded from the previous week’s heavy rotation away from AI and technology stocks, which had sent the index lower because several of these stocks happen to be among the biggest components of the capitalization weighted index. Altogether, the S&P rose by a little under 1.8% on the strength of their rebound, closing at 7,483.24 on Thursday, 2 July 2026 before traders and investors both headed out for the long Fourth of July holiday weekend.

Perhaps the most notable headlines driving stock prices during the week were those reporting about the declines of oil and fuel prices. The oil shock from the Iran war geopolitical event had raised fears of prolonged high inflation as the impact of high oil and gas prices would progressively spread into other sectors of the economy.

Falling oil and gas prices however would mitigate those inflationary pressures. That in turn would reduce the odds of multiple interest rate hikes by the Federal Reserve in upcoming months.

Overall, we find the S&P 500′s trajectory falls well within the new redzone forecast range we added to the alternative futures chart in the previous edition of this series:

This new redzone forecast range is based on the assumption investors will hold their forward-looking focus on the current quarter of 2026-Q3 as they set current day stock prices. That makes sense because the CME Group’s FedWatch Tool projects the Fed will hike the Federal Funds rate by a quarter point to a target range of 3.75-4.00% after the Fed meets on 16 September (2026-Q3).

The bigger question right now is what will happen beyond that date. Through the close of trading on 2 July 2026, the FedWatch tool anticipates another quarter point rate hike on 17 March (2027-Q1). But that expectation has been fluid over the last several weeks. If oil and fuel prices continue falling, we would expect the probability the Fed will hike rates in 2027 will drop below 50%. If oil and gas prices drop more quickly in the weeks ahead, then the expected rate hike in September 2026 will come into question.

That possibility, and other market moving events, will be something investors consider as weigh what they absorb the random onset of new information from the newstreams in those upcoming weeks. Speaking of which, here are the market moving headlines from the week that was:

Monday, 29 June 2026

• Signs and portents for the U.S. economy:

• What’s good for the US economy now may not be good for stocks
• Cheaper AI is better: Soaring bills are reshaping how businesses choose models
• Oil settles up on US-Iran strikes; cautious hopes for shipping cap gains

• Trump urges gasoline retailers to lower prices, warns of ‘big problems’ if they don’t

Fed minion with alleged ethics problems allowed to stay on job ‘for now’:

• Supreme Court lets Lisa Cook remain as a Federal Reserve governor for now

Bigger trouble, stimulus developing in China:

• China’s factory activity likely returned to meagre growth in June: Reuters poll
• Rate On China’s New Overnight Liquidity Tool Comes Below Estimates, Hints At Imminent Easing

• China central bank conducts overnight reverse repos again, keeps rate at 1.25%, sources say
• China central bank doubles overnight cash injection, keeps rate unchanged, sources say

ECB minions say Eurozone economy so good they can afford to hike rates:

• Europe’s economic resilience gives ECB greater room to move rates, Lagarde says

• Euro zone corporate lending growth at 3-year high, ECB says

Wall Street closed higher as tech rebounded and U.S.-Iran tensions eased

• Wall Street ends higher as US, Iran attacks ease; major tech-related shares jump

Tuesday, 30 June 2026

• Signs and portents for the U.S. economy:

• US single-family home prices ease on a monthly basis in April, FHFA says
• Oil falls as investors focus on potential Iran-US talks in Doha
• US retailers frontload China orders for holiday season, shipping firms say
• US job openings rise to two-year high, but hiring still struggling
• US expected to not extend USMCA, starting a decade-long countdown for trade pact

Fed minions looking forward to some peace and quiet, still fear inflation and are starting to lose some of their best customers:

• Quarter-end expected to be quiet for Fed liquidity facilities
• Fed’s Hammack tells CNBC rate hikes may be needed to quell high inflation
• For first time, more central banks are set to shrink dollar holdings, survey finds

Some growth signs developing in China:

• China factory activity grows faster than expected in June on tech export demand

Bigger trouble developing in Japan, BOJ minions credibility again at risk:

• Yen stumbles to 40-year low

• Japan keeps intervention rhetoric unchanged despite yen’s slide to 40-year low

Japan’s May factory output growth lagged forecasts

BOJ’s slow, dovish revamp casts doubt over long-term rate-hike plans

ECB minions suddenly rethinking their rate hike plans for Eurozone, still afraid of inflation:

• Surprisingly quick oil price retreat eases urgency for ECB to act, sources say

• ECB should not rush any further rate hike, Demarco says
• Lower oil price eases pressure on ECB to act, Dolenc says

ECB’s inflation fears linger despite oil price retreat

S&P 500, Nasdaq register best quarter since 2020 despite Iran war

• Wall Street moved higher as tech continues to rebound

• AI, chip stocks continue to rebound, boosting Wall Street higher

Wednesday, 1 July 2026

• Signs and portents for the U.S. economy:

• US Manufacturing Expanded For 6th Straight Month In June As Inflation Fears Ease

• US factory activity eases off four-year high; input prices remain elevated

Oil falls as markets await outcome of Iran-US talks, US stocks data

New chief Fed minion lays out the central bank’s agenda for Fed minions:

• Fed’s Warsh vows to ‘disappoint’ anyone who thinks he will tolerate inflation above 2%
• Fed’s Warsh plans to harness better economic data within a year
• Fed’s Warsh says any balance sheet policy change won’t be a surprise

Mixed growth signs developing in China:

• China resale home prices fall faster in June, shows private survey
• China’s factory activity completes strongest quarter since late 2020, private PMI shows

Japan’s economy shows signs of growth, BOJ minions salivate over opportunity to hike Japan’s interest rates:

• Japan manufacturing extends growth, caps best quarter since Q1 2014, PMI shows

• Japan business mood hits 8-year high, builds case for BOJ rate hikes

ECB minions plans to keep hiking rates may be put on hold:

• Euro zone inflation falls more than expected, adding to ECB case for patience

U.S. stocks decline at the start of the second half of the year as tech struggles

• Wall Street ends choppy session lower as tech shares drop

Thursday, 2 July 2026

• Signs and portents for the U.S. economy:

• U.S. economy added 57,000 jobs in June, less than expected; unemployment rate at 4.2%

• US job growth likely cooled in June after recent string of big gains
• 2-year Treasury yield eases as light jobs report reduces Fed hike expectations

US factory orders fall in May, weighed down by weak demand for commercial aircraft

Oil falls for a third straight day after US, Iran conclude talks in Doha

Why the U.S. housing shortage might be nearing its end

Odds of rate hike before year-end fall; odds for one 25 bps cut rise

Fed minions thinking about maybe not hiking U.S. interest rates, say their current monetary policies are ‘slightly restrictive’:

• Fed seen less likely to raise rates as job growth slows

• Cooling US jobs data buys the Fed and stock market more time
• Weak jobs, declining labor force, could renew Fed debate over state of labor market

Fed’s Daly says US policy ‘slightly restrictive,’ next step uncertain

Bigger trouble, stimulus developing in China:

• Iran Runs Into Big Problem: No Buyers For Its Oil, As Full Tankers Pile Up Off China

BOJ minions / Bigger trouble developing in Japan:

• Japan shifts to ambush intervention tactics against yen short sellers

• Yen Surges As Jittery Traders Expect Imminent Intervention After Japan Reveals New Strategy To Wipe Out Shorts

ECB minions want to keep tight control over Eurozone banks to keep them from risk of failure, even if it means losing money:

• ECB pushes back on calls for lower bank capital levels

• German banks reject ECB’s potential move to lift minimum reserves

ECB considers lifting banks’ minimum reserves to lessen own losses

S&P 500 posts weekly gain, led by financials and communication services

• Nasdaq ends lower with tech; investors assess softer jobs data
• Dow jumps nearly 600 points to record close; Nasdaq slides as chip stocks suffer

The Atlanta Fed’s GDPNow tool‘s estimate of real GDP growth for the U.S. economy in the current quarter of 2026-Q2 plunged to +1.2% from the previous week’s real growth estimate of +2.5%.

Image credit: Microsoft Copilot Designer. Prompt: “An editorial cartoon of a Wall Street bull and bear watching a Fourth of July drone show”.