The financial markets kicked off July with a flurry of major developments as strong U.S. economic data, legislative breakthroughs, and shifting monetary policy expectations reshaped investor sentiment. The release of robust June nonfarm payrolls, the passage of the controversial "Big and Beautiful" tax and spending bill, and rising Treasury yields sent shockwaves across asset classes—pushing gold sharply lower by more than $50 and fueling gains in U.S. equities.
👉 Discover how rising yields and strong labor data are reshaping investment strategies in 2025.
Market Overview: Equities Rally Amid Rate Uncertainty
U.S. stocks climbed on the back of upbeat macroeconomic signals. The Dow Jones Industrial Average rose 0.77%, while the S&P 500 advanced 0.83% to close at 6,279 points—a new record high. The Nasdaq Composite outperformed with a 1.02% gain, reaching 20,601 points, driven by strength in tech and AI-related sectors. The China Golden Dragon Index also rebounded 0.4%, reflecting improved risk appetite.
The rally came despite a sharp move higher in bond yields. The 10-year U.S. Treasury yield jumped 6 basis points to 4.34%, its highest level in weeks, as stronger-than-expected labor data diminished hopes for an early Federal Reserve rate cut.
Labor Market Strength Dampens Rate Cut Hopes
The U.S. Labor Department reported that nonfarm payrolls increased by 147,000 in June, surpassing the forecast of 110,000 and signaling enduring labor market resilience. The unemployment rate fell to 4.1%, down from 4.3% expected, marking a positive sign for economic stability amid trade tensions and inflation concerns.
Average hourly earnings rose 0.2% month-over-month, slightly below the 0.3% expected, while average weekly hours held steady at 34.2.
"The labor market remains solid," said David Meger, head of metals trading at High Ridge Futures. "This data suggests the Fed is in no rush to cut rates in July—possibly pushing any easing to later in the year."
Market pricing now reflects only 51 basis points of total rate cuts by year-end, down from 66 bps before the report. As a result, the U.S. dollar strengthened, weighing heavily on dollar-denominated commodities like gold.
"Big and Beautiful" Bill Clears Congress
The U.S. House of Representatives passed the revised version of the "Big and Beautiful" Act, sending it to President Trump for signature ahead of the July 4 deadline. The final vote was 218–214, highlighting deep political divisions over the legislation.
The bill includes sweeping tax reductions for corporations and high-income individuals, cuts to federal aid programs, and is projected to significantly expand the national debt.
👉 Explore how fiscal policy shifts could impact global markets and digital assets in 2025.
IMF Warns of Fiscal Risks
Julie Kozack, spokesperson for the International Monetary Fund (IMF), stated that the legislation runs counter to efforts to reduce fiscal deficits. “From the IMF’s perspective, the U.S. urgently needs to control spending and prevent further increases in debt-to-GDP ratios,” she said during a press briefing.
The IMF plans to address its updated assessment of U.S. fiscal policy in its World Economic Outlook report, scheduled for release in late July.
Trade and Inflation Data: Mixed Signals
U.S. trade imbalance widened in May, with the trade deficit expanding to $71.5 billion**, above the $71 billion forecast and up from $602.6 billion in April. Exports fell **4% to $2.79 trillion, while imports dipped slightly by 0.1% to $3.51 trillion.
Notably, U.S. imports from China dropped 26.3%, and exports to China declined 19.9%, reflecting ongoing trade friction and supply chain adjustments.
Meanwhile, the ISM Non-Manufacturing Index rose to 50.8 in June—above the 50-point threshold indicating expansion—and beat expectations of 50.5. The index’s input prices component surged to 67.5, signaling persistent inflationary pressures in services.
U.S. durable goods orders for May were revised upward to a 16.4% monthly increase, matching expectations, while core capital goods orders (excluding transportation) rose 0.5%.
Sector Highlights: Tech Leads Gains
Technology stocks powered the rally, with Nvidia climbing 1.3% to a new all-time high, bringing its market capitalization close to $4 trillion. Microsoft shares rose 1.58%, while financial giants JPMorgan Chase and Citigroup each gained around 2%.
Datadog saw its stock surge 14.9% after being added to the S&P 500 index, effective next week.
AI Infrastructure Momentum Builds
CoreWeave announced it has received the first commercial deployment of NVIDIA’s latest AI server system—the GB300 NVL72—supplied by Dell Technologies. The system will enable faster development and deployment of large-scale AI models for enterprise clients.
CoreWeave plans to roll out additional units throughout the year, signaling growing demand for next-generation computing infrastructure.
Commodities and Forex: Gold Retreats, Oil Holds Steady
Gold Plummets on Strong Dollar
Spot gold dropped over $50**, closing at **$3,325.40 per ounce—a decline of 0.95%—as higher yields and a stronger U.S. dollar reduced its appeal as a safe-haven asset.
Gold had risen for three consecutive days prior but failed to break above the $3,360 resistance level.
Oil Prices Dip Amid Supply Concerns
WTI crude oil fell 0.52% to $67.10 per barrel, as traders weighed OPEC+’s potential output increases against softening demand signals.
OPEC+ members are discussing an additional production hike of 411,000 barrels per day in August, following similar increases in May through July. A virtual meeting is expected this weekend to finalize the decision.
At the same time, the number of active U.S. oil and gas rigs fell by 8 to 539, according to Baker Hughes—marking the tenth consecutive weekly decline, the longest streak since 2020.
Cryptocurrencies: Bitcoin Holds Above Six Figures
Bitcoin edged up 0.69% to $109,663, maintaining its position above six figures amid growing institutional interest and macro uncertainty.
Ethereum gained 0.82% to $2,592.80, supported by increased activity in decentralized finance (DeFi) applications.
Market analysts suggest that digital assets are increasingly being viewed as both inflation hedges and alternative stores of value amid expansive fiscal policies.
👉 Learn how top investors are positioning crypto portfolios amid rising yields and inflation risks.
Policy Outlook: What’s Next for Rates?
U.S. Treasury Secretary Scott Bessent suggested that if the Fed delays rate cuts now, it may be forced into a more aggressive easing cycle by September.
“Real interest rates are too high,” Bessent said on CNBC. “If the Fed waits, they might have to cut more later.”
He also reaffirmed support for a strong dollar policy, arguing that short-term fluctuations don’t undermine the greenback’s global reserve status.
Additionally, Bessent hinted at potential leadership changes at the Fed, noting that two board seats could open up by mid-2026—though Chair Jerome Powell’s term as governor extends until 2028.
Electric Vehicle Tax Credits Set to Expire
A major shift looms for the EV market: Congress has approved legislation ending the $7,500 new vehicle tax credit** and **$4,000 used EV credit on September 30.
Barclays analyst Dan Levy warned this could trigger a surge in pre-expiry purchases followed by a sharp drop in demand afterward—a classic “pull-forward” effect that may distort sales trends in Q3 and Q4.
Global Developments
- European markets were mixed: Germany’s DAX rose 0.61%, France’s CAC 40 gained 0.21%, but the UK’s FTSE 100 slipped 0.55%.
- The U.S. dollar index climbed 0.36% to 97.0, while EUR/USD fell 0.35%, staying below 1.1800.
- USD/JPY jumped 0.88%, nearing the key psychological level of 145.
- In Asia, Hong Kong’s night futures traded at a discount, reflecting cautious sentiment ahead of mainland policy updates.
Frequently Asked Questions (FAQ)
Q: Why did gold prices drop despite inflation concerns?
A: Although gold is traditionally an inflation hedge, rising U.S. Treasury yields increase the opportunity cost of holding non-yielding assets like gold. Combined with a stronger dollar, this led to profit-taking after recent gains.
Q: How will the "Big and Beautiful" Act affect long-term economic growth?
A: Proponents argue it stimulates investment via tax cuts; critics warn it could inflate deficits and reduce fiscal flexibility during downturns. The IMF has expressed concern over rising debt levels.
Q: Is the Fed still likely to cut rates in 2025?
A: Yes—but later than expected. Strong jobs data reduced odds of a July cut; markets now price in reductions starting in September or November, totaling around 50 basis points by year-end.
Q: What does OPEC+’s planned production hike mean for oil prices?
A: Increased supply could pressure prices further unless offset by stronger global demand or geopolitical disruptions.
Q: Why are EV tax credits expiring?
A: Lawmakers argue that after years of subsidies, the EV industry should stand on its own. The phaseout aims to reduce budget deficits while allowing consumers time to adjust.
Q: Can Bitcoin continue rising with higher interest rates?
A: Historically, high rates challenge risk assets—but Bitcoin is increasingly seen as digital gold. Institutional adoption and macro uncertainty may support prices despite rate headwinds.
Core Keywords: nonfarm payrolls, Treasury yields, gold price drop, Fed rate cuts, stock market rally, OPEC+ production, EV tax credit expiration