Things you need to know
- It’s another new month and stocks are celebrating.
- Earnings season is over the next catalyst will be the eco data.
- Oil is up, Bonds are down, yields are up. Gold remains confused.
- It’s a big eco week – the focus is on the NFP report.
- Try the Sweet and Sour Chicken Thighs.
I am joining Cheryl Cassone on Mornings with Maria at 8:20 am on Fox Business
Good morning – OK – It’s a new month and the last month of the second quarter – summer is in full swing and the markets continue to march higher despite so many reasons it ‘supposedly’ shouldn’t.
On Friday – we saw the Dow gain 363 pts or 0.7%, the S&P up 16 pts, the Nasdaq added 55 pts, the Russell lost 17 pts, the Transports gained 55 pts, the Equal Weight S&P added 19 pts… while the Mag 7 lost 130 pts.
Now let’s talk about breadth, because one of the biggest complaints about this market over the past two years has been that it was being carried by a handful of mega-cap AI names. And for a long time, that criticism was fair.
But the YTD numbers tell a different story today.
Think about what those figures are saying. The Russell is up 17.6%, the Transports are way out in the lead at 23%, the Nasdaq’s ahead 16% — while the so-called Magnificent 7 are up just 7.7%. The mega-caps that kept this market going for the past two or three years are now LAGGING both the Nasdaq and the broader S&P.
That tells us something important. The average stock is contributing more to this advance than it has in years. For much of 2023, 2024, and even parts of 2025, seven stocks were pulling the entire wagon. Today, the participation is much broader.
And don’t overlook the Transports. A 23% gain in that group is significant. Recall what Dow Theory tells us — when freight companies, airlines, railroads, and logistics firms are outperforming, it’s usually because investors have confidence in the economic activity ahead. Goods are moving. People are traveling. Business is being done. That’s not the kind of action you typically see when investors are worried. And just look at the VIX — way down in the complacent zone at 15.84 telling you that investors remain far more focused on earnings, growth and AI than they are on the latest geopolitical headline.
Now, there is one caveat. The cap-weighted S&P is still outperforming the Equal Weight by roughly 2 percentage points. So, let’s not pretend leadership has completely disappeared. The larger names are still exerting an outsized influence. But they are no longer doing all the heavy lifting.
Here’s the way I see it. Over the past 3 years seven stocks have been pulling the wagon. In 2026, the whole team is pulling – but the bigger horses are still at the front. And honestly, that’s exactly what you want to see if this bull market is going to keep climbing the wall of worry.
And while Friday’s headlines had investors celebrating easing geopolitical tensions, lower oil prices and strong earnings, the reality this morning is a bit more nuanced. The temperature in the room is rising again — and we’re seeing it first in oil, then in bonds.
Over the weekend, both the US and Iran clashed over the language and demands in the draft agreement, while Israel pushed deeper into Lebanon — planting a flag on the Beaufort Castle in the south, scoring a “win” in its expanding ground offensive against the Iran-backed Hezbollah. And all that does is raise the temperature. We’re watching that clash play out across a range of assets right now.
Start with oil. On Friday, crude fell another $1.15 to settle at $87.50 a barrel as investors grew confident the Iran ceasefire would hold, and the Strait of Hormuz would stay open. This morning? Oil is up $3.30 — as the Lebanon push raises fresh fears that the ceasefire is under pressure. So much for the calm.
Bonds tell the same story in reverse. Prices rose last week, sending yields lower — but this morning bonds are under pressure and yields are backing up. The 2-year is up 4 bps at 4.03%. The 10-year up 3 bps at 4.46%. The 30-year up 2 bps at 4.99%.
And then there’s gold — which, under these circumstances, should be ripping higher. Instead, it’s caught in a tug-of-war between the safe-haven trade and the prospect that stronger economic data could keep the Fed cautious.
This morning gold trades at $4,496 — down $43 — locked between the trendlines, with support at $4,406 and resistance at $4,630.
Now, this week is full of eco data, and that should allow investors to refocus on what ultimately drives markets over time – the fundamentals. Remember, geopolitical headlines are great at creating short-term chaos, volatility, and investor angst, but they rarely determine the long-term direction of stocks. The real meat and potatoes for investors remains economic growth, corporate earnings, and the innovation cycle (tech revolution) that’s driving businesses to become more productive and more efficient.
And speaking of earnings… For the past six weeks, we have had a steady stream of earnings reports to digest. S&P companies delivered earnings growth of nearly 29% — the strongest quarterly growth rate we’ve seen since 2021. Between AI spending, productivity gains and corporate America’s ability to protect margins, earnings once again reminded us why stocks ultimately follow profits – recall what Larry Kudlow always says – “profits are the mother’s milk for stocks’.
But earnings season is now largely behind us. And that means the market is entering what I call the “prove it” phase. The easy money made on earnings surprises is over. The S&P has rallied for nine consecutive weeks. That’s a remarkable run. The next round of earnings doesn’t begin until July, so investors are going to need a new catalyst and that shifts the spotlight squarely onto the eco data and the focus this week and make no mistake about it is the labor market. Everything else is just a warm-up act.
Today we get ISM Manufacturing -expected to be in the expansion zone, Price Paid – expected to tick up ‘just a bit’, New orders – also expected to tick up ‘just a bit’ and Construction Spending m/m at +0.3%.
Tomorrow brings JOLTS Job Openings. Wednesday gives us ADP Employment – and is expected to show an increase of 118k new jobs while the ISM Services index is expected to come in just north of the neutral line in the expansion zone. Thursday delivers Weekly Jobless Claims and Productivity.
But let’s not kid ourselves. None of those are the main events. Friday’s Non-Farm Payroll Report is what matters. Period.
The street is looking for 90k new jobs, unemployment holding at 4.3%, while average hourly earnings are up 0.3% m/m and 3.4% y/y.
What the market wants is a Goldilocks print. Not too hot. Not too cold. Strong enough to prove the economy’s still healthy — weak enough to convince the FED to keep the possibility of lower rates on the table. A hotter number and higher wages reignites the inflation fear and pushes yields higher. A weaker number raises the question nobody wants to ask out loud: is the economy slowing faster than we think? The sweet spot sits right in the middle and if that’s what we get, this bull market may have enough strength to keep climbing the wall of worry.
European markets are flat – nothing to discuss.
US futures are higher (surprisingly)…. Dow futures + 210, S&P’s +18 pts, the Nasdaq +70 while the Russell is +1. Trump has called all cabinet members to meet in the Situation Room to make a final determination over Iran…. Reiterating that Iran must never have a nuclear weapon and that the Strait has to reopen now. I would not be surprised if we saw a ‘sell the news reaction’ if and when a final deal is announced, but I also think it will be short lived.
The S&P closed at 7,580 – up 16 pts and this morning it looks like we want to test S&P 7600. If we do – that would represent a 1300 point move off the March low, which is great, but remember – momentum remains stretched. RSIs across the indexes remain near or are kissing the overbot line and that is a caution flag. Either way – eventually there will be a pullback, markets will rotate and consolidate, in fact you want to see that happen after the dramatic moves we have seen.
Give me a call to discuss your goals and your timeline. Let’s assess the risk in your portfolio and your tolerance for volatility — give me a call at 561-931-0190. Happy to do a complimentary portfolio review and risk assessment.
Take good care,
Kp
[email protected]
Source: Bloomberg, CNBC, Reuters, Wall Street Journal
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Sweet and Sour (Italian style) Marinated Chicken Thighs (you could always use breasts, but the dark meat is always better.) –
I’m featuring this today because the market is beginning to feel a bit ‘sweet and sour’ – just like the chicken…
You need: Thighs, skin on, olive oil, s&p, diced onion, chopped carrots, chopped celery, plenty of sliced garlic cloves – 6+, ¼ c sugar, 1 c Chianti, ½ c red wine vinegar, ½ c orange juice with pulp, *sliced almonds – optional.
Season the chicken pieces with s&p – set aside. In a heavy frying pan – heat up some olive oil, – now brown the chicken on all sides. Remove and place on a platter.
Now add the garlic, carrots, celery, and onion – sauté for 10 mins on med heat…. Now add the sugar, wine, vinegar, orange juice, and almonds…. bring to a boil – add back the chicken – skin side up. Place a lid off center and turn heat to simmer. Cook for about 30 mins.
Now remove chicken and place on a platter, – turn heat up to high and stir until it is nice and thick…not long…maybe like 4 mins max…..taste – adjust seasoning with s&p. Spoon the sauce over the chicken pieces and serve.
This dish works well with a green veggie – like French cut green beans or broccoli. Make a large mixed green salad with tomatoes, red onion and cucumbers. Dress in a balsamic Vinegar and Olive oil dressing. Keep it simple – as the chicken and marinade carry the dish.
Buon Appetito