Stock Market Rally: Nasdaq, S&P 500 Set Records as Jobs Beat and AI Stocks Surge

Markets Explode Higher as S&P 500, Nasdaq and Dow Reclaim All-Time Highs

Wall Street’s major indices posted a forceful rally into the July 4 holiday as the S&P 500 (^GSPC) hit 6,279.41, climbing +0.84%, while the Nasdaq Composite (^IXIC) notched a record at 20,604.31 (+1.04%). The Dow Jones Industrial Average (^DJI) followed with a +0.77% gain, finishing at 44,825.99. This surge was powered by a potent mix of labor market resilience, easing trade jitters, and AI-driven tech euphoria.

June Jobs Shock: 147,000 Added, Rate Cuts Off the Table for July

The U.S. economy defied slowdown fears by adding 147,000 nonfarm payrolls in June — sharply above the 110,000 estimate. Unemployment unexpectedly declined to 4.1%, versus expectations of a rise to 4.3%. However, most of the job creation was concentrated in government, healthcare, and education, with the private sector contributing just 74,000 new jobs. Fed fund futures slashed the odds of a July rate cut to under 5%, compared to 24% just one day prior.

Fed Stays in ‘Wait-and-See’ Mode Despite Consumer Weakness

Despite the jobs beat, macro strategists like MUFG’s George Goncalves warned the labor market’s cracks are widening, with slowing consumer spending, rising jobless claims, and concentration of hiring in public sectors. According to Goncalves, “The Fed remains at least 100 basis points too tight,” suggesting September remains the earliest realistic window for easing — if at all in 2025.

AI Titans Microsoft (MSFT) and Nvidia (NVDA) Eye $4 Trillion Valuations

Tech continued to lead the charge. Nvidia (NVDA) surged above $159.48, pushing its market cap to $3.92 trillion, threatening to eclipse Apple (AAPL) as the most valuable company ever. Meanwhile, Microsoft (MSFT) advanced to $499.45, buoyed by Wedbush analyst Dan Ives predicting both NVDA and MSFT could breach $4 trillion valuations by summer’s end. Ives cited a $2 trillion AI investment wave across enterprise and government as the key driver.

Datadog (DDOG) Rockets on S&P 500 Inclusion; CrowdStrike (CRWD) and Synopsys (SNPS) Follow

Datadog (DDOG) spiked 14.65% to $154.79 after S&P Global announced its inclusion into the S&P 500 index, replacing Juniper Networks. Wedbush raised its target to $170, calling DDOG “AI’s observability core.” CrowdStrike (CRWD) rose 4% to fresh all-time highs as analyst Dan Ives lifted the target to $575, citing “deal momentum.” Meanwhile, Synopsys (SNPS) and Cadence Design (CDNS) each gained over 5% as the U.S. lifted chip software export curbs to China.

S&P 500 Sees 36 New 52-Week Highs; Financials Dominate Breakouts

A flood of institutional breakouts marked Thursday’s tape, with 36 S&P 500 constituents hitting new 52-week highs — 25 of them all-time records. Notable names include:

• Royal Caribbean (RCL) – highest since IPO (1993)

• American Express (AXP) – all-time high since 1977

• JPMorgan Chase (JPM), Goldman Sachs (GS), and Morgan Stanley (MS) – all posted new lifetime highs

• Oracle (ORCL) – reached its peak since March 1986

• Nvidia (NVDA) and CrowdStrike (CRWD) also hit historical records

By contrast, Centene (CNC) hit new multi-year lows, dropping to levels last seen in March 2017.

Russell 2000 Turns Green for 2025 as Small Caps Join the Rally

The Russell 2000 Index (^RUT) rose 0.85% to 2,245.35, pushing the small-cap benchmark into positive territory for the year. With a 24% rally since April lows, small caps are now outperforming large caps month-to-date, reflecting revived appetite for broader U.S. equity exposure amid rate volatility.

Trump’s Trade Strategy Ignites Market Optimism but Adds Uncertainty

The recent U.S.-Vietnam trade deal, finalized just ahead of the July 9 tariff reinstatement deadline, boosted investor sentiment. Wall Street is pricing in more deals — with potential accords with India and Brazil still in negotiation. However, threats of escalating levies on Japan and Europe remain active risks. Trump's tax-and-spending “One Big Beautiful Bill” also advanced toward a final House vote after passing the Senate 219–213. The bill’s fate could meaningfully shift fiscal stimulus expectations in Q3.

Oil and Gas Slide as Ceasefire Cools Geopolitical Risk

Crude futures reversed course after earlier gains. WTI (CL=F) slid to $66.84, down 0.95%, and Brent (BZ=F) slipped under $69. The pullback followed news of U.S.-Iran nuclear talks restarting, alongside Trump's ceasefire announcement between Israel and Iran, which dampened energy supply concerns. Meanwhile, gas prices hit their lowest since 2021, at $3.16 per gallon nationally, saving U.S. drivers an estimated $500 million this July 4 weekend.

Meta Platforms (META) Gains on Labor Productivity Metrics

Meta (META) gained 0.75% to $718.91 after being upgraded to Hold by Needham. The rationale: Meta posted the highest free cash flow per employee in FY24 — over $730,000, outperforming both Apple (AAPL) at $663,457 and the big-cap tech average of $302,000. However, heavy AI CapEx limits the upside, keeping institutional ratings cautious.

Burford Capital (BUR) Surges 19% on Regulatory Relief

Burford Capital (BUR) rallied 19% this week as tax provisions targeting litigation finance were stripped from the reconciliation bill. The change, supported by Senate Parliamentarians, removed a significant threat to the sector’s operating model — a win for investors in alternative asset structures.

Short Interest Climbs in Nasdaq-100 and S&P 500 Amid Record Highs

Despite the rally, short interest in the Nasdaq-100 rose from 5.2% to 6.1%, and S&P 500 short interest increased from 5.4% to 5.8%, per S3 Partners. This divergence hints at hedging activity or skepticism among funds, even as indices push to new highs. Notably, global indices have outperformed the S&P 500, with the U.S. benchmark up only 6% YTD, trailing 15–20% gains abroad.

Bond Yields Swing After ISM and Jobs Surprise; Traders Ditch July Cut Bets

The 10-year Treasury yield (^TNX) jumped to 4.336%, while the 2-year yield (^TMUBMUSD02Y) rose to 3.88%. Stronger-than-expected ISM Services (50.8) and PMI (52.9) prints added to pressure. Traders now assign just 5% odds to a rate cut this month, with September now the only realistic timeline. BlackRock’s Rick Rieder called bonds “the safer bet” amid signs that “jobs are harder to find.”

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