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New York, June 26 EST: U.S. markets are walking a fine line between confidence and caution, with the S&P 500 and Nasdaq-100 brushing up against all-time highs on Wednesday, propped up by shifting Fed expectations and steady earnings momentum from tech’s heaviest hitters.
The SPDR S&P 500 ETF Trust (SPY) closed at $610.86, within half a percent of its February record. Meanwhile, the Invesco QQQ Trust (QQQ) — tracking the tech-heavy Nasdaq-100 — held at $544.96, staying close to its own intraday peak. Both benchmarks reflect a market that’s quietly bullish but waiting for the next green light.
Market Leans Toward Cuts, But Powell Isn’t There Yet
Traders have started to lean harder into the idea that the Federal Reserve could cut rates sooner than expected, following softer economic data and easing inflation pressure. According to Reuters, the odds of a July rate cut now sit at around 25%, double what they were a week ago. Futures imply 63 basis points of easing by year-end.
But that optimism is running ahead of the Fed’s own signaling. Chair Jerome Powell has kept his cards close, warning against premature assumptions. With GDP contracting by 0.5% in Q1 but jobless claims falling, the macro picture is more muddled than clear. That puts the Fed — and the market — in a wait-and-see posture.
There’s also a political wrinkle. Donald Trump, should he win in November, is reportedly considering replacing Powell — a move that would upend the central bank’s leadership and inject fresh uncertainty into rate forecasts.
Big Tech Isn’t Just Surviving — It’s Setting the Pace
What’s driving the rally is less about policy and more about performance. Micron’s upbeat forecast, tied to AI infrastructure demand, sent semiconductors higher across the board this week. Nvidia, AMD, Marvell, and others all gained ground on Micron’s signal that enterprise spending hasn’t slowed.
Nvidia itself just cleared $3.7 trillion in market value — leapfrogging Microsoft to become the world’s most valuable public company. That’s not just a stat; it’s a sign of where market leadership sits. These companies aren’t riding hype. They’re delivering results that justify sky-high multiples — at least for now.
Still, there’s growing concern about concentration. Gains are increasingly driven by a handful of names — the so-called “Magnificent Seven” — and money is crowding into the same trades: long megacap tech, short the dollar, long gold. If the Fed digs in its heels, some of those bets could unwind fast.
Cease-Fire Eases Oil Prices, Market Nerves
There’s also been some relief from overseas. A cease-fire between Israel and Iran has cooled Middle East tensions, helping send oil prices lower and easing inflation worries — at least temporarily. As Business Insider noted, calmer geopolitics make it easier for the Fed to pivot if it chooses to.
That said, geopolitical risk doesn’t vanish. It just moves out of the headlines. Investors will be watching how durable this truce proves and whether it spills into any real economic relief.
Technical Ceiling in Sight, But the Follow-Through Matters
On a chart, the S&P 500 is flirting with a breakout. A move above its February high would confirm a new leg up. But the question, as always, is whether volume follows price. If this rally broadens beyond tech and chips, it may have legs. If not, it risks becoming a rotation waiting to happen.
Barron’s flagged that a breach of the current highs, when supported by a wider group of sectors, tends to stick. But this market hasn’t exactly been equal-opportunity. Staples, small caps, and financials are still lagging. That’s fine in the short term — but less so if rate cuts stall and earnings don’t pick up elsewhere.
All Eyes on the Data Tape
Next up: the June jobs report and fresh inflation prints. Those will either reinforce the case for cuts or force a reset in expectations. For now, markets are pricing in hope — but they’re doing so with the wariness of traders who’ve seen this movie before.
It’s not a bubble. Not yet. But it’s a market priced for good news, with little room for mistakes.
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