Stocks Slip From Highs as Senate Marathon Persists
Published as of: July 1, 2025, 9:12 a.m. ET
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| The markets | Last price | Change | % change |
|---|---|---|---|
| S&P 500® index | 6,204.95 | +31.88 | +0.52% |
| Dow Jones Industrial Average® | 44,094.77 | +275.50 | +0.63% |
| Nasdaq Composite® | 20,369.73 | +96.27 | +0.47% |
| 10-year Treasury yield | 4.21% | -0.01 | -- |
| U.S. Dollar Index | 96.57 | -0.31 | -0.32% |
| Cboe Volatility Index® | 17.33 | +0.60 | +3.59% |
| WTI Crude Oil | $65.58 | +$0.57 | +0.88% |
| Bitcoin | $106,800 | -$1,430 | -1.33% |
Disclosure
Major index values are as of Monday's close; others are as of 8:49 a.m. ET.
(Tuesday market open) The second half of an eventful 2025 begins with attention squarely on the budget "vote-a-rama" in Washington, D.C. Major indexes initially stepped back from Monday's fresh all-time highs that came courtesy of falling yields, trade optimism, and info tech power. Beyond the Senate, investors will monitor trade updates, job openings, manufacturing data, and Federal Reserve Chairman Jerome Powell speaking on a panel as he faces fresh pressure from Trump to cut rates.
The Senate continues voting on amendments to President Trump's budget ahead of the July 4 deadline. It's unclear if the bill will clear the Senate today. "There is some downside risk were something not to pass," said Liz Ann Sonders, chief investment strategist at Schwab, on CNBC Monday. "Not getting something—meaning those 2017 tax cuts do not get extended—that would be a huge economic hit."
Wall Street's record highs suggest momentum still favors the bulls, though second quarter earnings season could help determine if current high stock market values are backed by growing profits and solid fundamentals. "Analysts did no extrapolation of better first quarter earnings to the remaining three quarters this year, suggesting the bar has been set fairly low for upcoming second quarter reporting season," Sonders said. "Outlooks will be more important than reports." Earnings slow this week with only one major company, Constellation Brands (STZ), on tap. Then it's crickets until after Friday's holiday.
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Three things to watch
- Slower earnings growth expected: Second quarter reporting season is around the corner, and S&P 500 earnings are seen up 5% year over year, FactSet says, well below 13.3% first quarter growth. Five sectors are expected to see EPS declines. Strong first quarter EPS growth might have partly reflected "pull-forward" demand as consumers and businesses bought goods ahead of tariffs, and some of that pull forward might have stretched into the second quarter. Also, a declining dollar could be a tailwind for companies with major overseas businesses. If so, early EPS estimates might be conservative. Focus also turns to profit margins with the U.S. average tariff rate up sharply from recent years. If companies decided to "eat" tariff costs by accepting lower margins, that could hurt earnings results. As reporting season begins, investors might seek insight on how companies are dealing with these extra costs. Passing them onto the consumer might mean higher inflation readings ahead, hurting rate cut odds.
- Sector halftime report as manufacturing may be boosting industrials: With today the exact halfway mark of 2025, the S&P 500 industrials sector leads the sector scorecard, up nearly 12% year to date compared with 10.6% for communication services. Financials, utilities, and info tech round out the top five. Industrials haven't finished first for a full year in the last 15 years but are the third-best performing sector over that time behind info tech and consumer discretionary. Some of the biggest industrial companies include GE Aerospace (GE), RTX Corporation (RTX), Caterpillar (CAT), Boeing (BA), and Honeywell (HON). Defense companies, airplane and airplane parts makers, big machinery firms, and railroads are heavy components of the industrials sector, so its strength this year could indicate investor confidence in the nuts and bolts of the U.S. manufacturing economy. The S&P 500 is up 5.5% year to date, and only three sectors—energy, health care, and consumer discretionary—are down for the year. Consumer discretionary got hurt by weakness in Tesla (TSLA), one of its largest components, and tariff worries.
- Tesla quarterly deliveries seen falling: Analysts have been cutting their 2025 delivery estimates as Tesla suffers sharp demand losses overseas. The latest update is expected tomorrow as Tesla reports second quarter deliveries. Consensus is around 393,000, according to Investor's Business Daily. That's down 11% from a year ago but up 17% from the first quarter. It's also down sharply from what analysts had estimated for the quarter heading into this year, and analysts now expect around a 5.6% drop for the full year from 2024. Some analysts are even less enthused, with JPMorgan Chase (JPM) expecting second quarter deliveries to fall 19% year over year to 360,000. Deliveries come after Tesla announced its first "driverless" shipment of a car to a customer.
On the move
- Nvidia (NVDA) pulled back 1% in pre-market trading after recent record highs. News appeared thin so this may be technical selling. Most of the mega caps joined Nvidia in losing ground before the open, along with names like Palantir (PLTR) and Broadcom (AVGO).
- Tesla dropped 6% ahead of the open, hurt by renewed feuding between CEO Elon Musk and Trump, with media reporting that Trump wants government cost cutters to look at subsidies for Musk's companies. Investors await Tesla's quarterly deliveries data tomorrow.
- Bitcoin (/BTC) slipped 1.2% in early trading and crypto-related stocks Coinbase (COIN) and Strategy (MSTR) fell more than 2% and more than 1%, respectively. Despite recent stock market strength and regulatory optimism, bitcoin hasn't moved much in the last week and showed little sign of testing recent record highs.
- Oracle (ORCL) inched slightly up in pre-market trading. Shares climbed almost 4% yesterday after Barron's reported that the company has signed several large cloud agreements including one expected to contribute more than $30 billion in annual revenue starting in fiscal year 2028.
- Apple (AAPL) added 0.5% early Tuesday after climbing 2% yesterday. The company is considering using AI technology from Anthropic PBC or OpenAI to power a new version of Siri, Bloomberg reported. This raised enthusiasm that Apple could recharge its efforts in AI, which suffered a blow earlier this year as an improved Siri got delayed.
- Walt Disney (DIS) was flat in early trading Tuesday but shares popped to a new 52-week high yesterday following an upgrade from Jefferies.
- Hasbro (HAS) climbed 1.7% ahead of the open following an upgrade from Goldman Sachs (GS) to Buy from Neutral.
- Sweetgreen (SG) fell 3.2% in pre-market trading after getting downgraded to Hold from Buy by TD Cowen.
- As of early Tuesday, odds of a July rate cut were 21%, according to the CME FedWatch Tool. The likelihood of at least one rate cut by September was 96%.
- Market breadth remains constructive, with nearly 72% of S&P 500 stocks above their 50-day moving averages and 53% above their 200-day moving averages. Things don't look really extended on that front, lending credence to the idea there could be more upside to come.
- During the second quarter, the S&P 500 climbed 11% and the Nasdaq Composite rose nearly 18%. The Dow Jones Industrial Average only gained 5%.
- For the month of June, the S&P 500 added nearly 5%, the tech-heavy Nasdaq-100® (NDX) rose 6.3%, and the DJIA rallied 5.3%.
More insights from Schwab
Power station: Crude oil prices reversed as tensions in the Middle East cooled, but AI likely raises electricity demand over the longer term, creating investment opportunities and risks. Oil supplies now exceed demand, noted Michelle Gibley, director of international research at the Schwab Center for Financial Research, in her latest analysis, though "AI is transforming the energy sector," raising power shortage concerns.
Chart of the day
Data source: Cboe, ICE. Chart source: thinkorswim® platform.
Past performance is no guarantee of future results.
For illustrative purposes only.
The U.S. dollar index ($DXY—candlestick) continues to sag, sliding yesterday to fresh three-year lows below 97. This could reflect concerns about the growing U.S. deficit, rising chances of Fed rate cuts, or concerns among foreign investors during trade tension. Momentum in the dollar, tracked by the Relative Strength Index (RSI) below the main chart, looks weak. Meanwhile, the 10-year Treasury note yield (TNX:CGI—purple line) trades at around 4.2%, signifying strength in the Treasury market over the last few months as the dollar has weakened. The dollar fell 10.7% in the first half, the weakest semi-annual performance since the second half of 1991.
The week ahead
Check out the Investors' Calendar for a summary of the top economic events and earnings reports on tap this week.
July 2: June Challenger job cuts report and ADP National Employment Report.
July 3: June nonfarm payrolls, June unemployment, June ISM Services PMI®, May factory orders, markets close early ahead of holiday.
July 4: Markets closed for Independence Day.
July 7: No major earnings or data expected.
July 8: No major earnings or data expected.
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