Market Momentum Continues Amidst Economic Crosscurrents

Wednesday saw another day of market gains, though the session wasn't without its dips and recoveries. While AI and tech continue to lead, the broader market seems to be participating in the upward trend.

• Dow Jones: +0.49%
• S&P 500: +0.61%
• Nasdaq: +0.94%
• Russell 2000: +1.07%

NVIDIA (NVDA) achieved a $4 trillion market cap milestone, fueled by demand for AI-related GPU's. Microsoft (MSFT) also reached new record highs. Even Fastenal (FAST) is trading at elevated valuations, currently at 40x forward earnings. Bitcoin (BTC) joined the party, hitting a new peak of $112,000.

Prime Day Disappoints on Day One

Amazon's (AMZN) Prime Day got off to a slow start, with sales down 41% year-over-year. It's important to note that comparing these figures to previous years isn't straightforward and consumers may simply be holding out for better deals later in the event. Last year, Prime Day sales reached $14.2 billion. We will have to wait and see if the sales will pick up later in the week, especially considering recent signs of weakening consumer spending.

Fed Divided: FOMC Minutes Reveal Divergent Views

The FOMC minutes from last month's meeting revealed internal disagreements. While the decision to hold rates steady at 4.25-4.50% was unanimous, some members favored a rate cut as early as July, while others preferred no cuts at all for the remainder of 2025. Reaching a consensus will be a key challenge for the Fed moving forward.

Furthermore, "many participants" are banking on new trade deals to mitigate inflationary pressures from impending tariffs. However, progress on this front has been slow. President Trump has recently threatened a 50% tariff on Brazil, indicating further complexities in trade negotiations.

What to Watch Tomorrow

Before next week's start to Q2 earnings season, Thursday brings key reports from Delta Air Lines (DAL), Conagra (CAG), and Helen of Troy (HELE). Delta's report will offer insights into the airline travel sector, while Conagra provides a view on agricultural exports.

Helen of Troy (HELE), parent company of OXO, could be significantly affected by the evolving tariff landscape. The company missed earnings estimates last quarter, leading to a CEO change. Initial Jobless Claims will also be closely monitored. While Initial Claims have declined recently, Continuing Claims are approaching 2 million, potentially signaling a shift in the perception of the labor market's strength.

Key Takeaways:

• Markets continue to rise, but underlying economic conditions are mixed.
• Conflicting opinions within the Federal Reserve could lead to policy uncertainty.
• Trade tensions and tariffs pose risks to inflation and economic growth.
• Labor market data will be crucial in assessing the overall health of the economy.