Markets came back from the holiday weekend with AI firmly back in the driver’s seat. On Monday, the S&P 500 rose 0.7%, the Nasdaq gained 1.1%, and the Dow added 0.3% to close at a record, helped by renewed strength in AI-linked names and chip stocks. By Tuesday morning, that same trade got shakier as Samsung’s blowout profit forecast still failed to quiet concerns about AI supply, pricing, and whether the chip cycle is moving from scarcity to digestion. The AI rebound on Monday quickly became a chip-led pullback on Tuesday.
The message was familiar: the market can still climb when AI leadership is working, but the margin for disappointment is thin. SpaceX’s Nasdaq-100 inclusion added another wrinkle, with index demand meeting valuation gravity in real time.
The June jobs report gave investors a softer labor tape without a recession flare. Payroll employment rose by 57,000, the unemployment rate held near steady at 4.2%, and average hourly earnings rose 0.3% on the month and 3.5% over the past year. The more important detail was in the revisions: April and May employment gains were marked down by a combined 74,000, trimming some shine from the spring hiring run, according to the June employment report.
The Fed held its target range at 3.50% to 3.75% in June, saying economic activity was expanding at a solid pace while inflation remained elevated relative to its 2% goal. That setup has left markets parsing every data point for whether the central bank has enough cover to stay patient, or whether inflation pressure forces another move later this year, based on the latest FOMC statement.
Households gave the Fed a mixed message this week. The New York Fed’s June survey showed one-year inflation expectations rising to 3.7%, the highest reading since September 2023, while three-year expectations rose to 3.3% and five-year expectations held at 3.0%. Gas-price expectations fell sharply, which helps the headline story, but the broader psychology of inflation still looks sticky in the Survey of Consumer Expectations.
The real economy still looks expansionary. ISM’s Manufacturing PMI registered 53.3 in June, down from May but still in growth territory for a sixth straight month. New orders stayed healthy at 56.0, production expanded, and prices eased from May’s very hot reading while remaining elevated at 73.0. Employment stayed slightly contractionary at 49.7, which fits the broader labor-market story: slower hiring, still-moving demand, and firms watching costs closely in the June manufacturing PMI.
Services also held up. ISM’s Services PMI registered 54.0, marking 24 straight months of expansion. Business activity and new orders cooled, but employment moved back into expansion at 51.2. Prices eased to 67.7, the lowest since February, while data-center-related inputs stayed tight, a small but telling sign of how AI infrastructure is spilling into old-fashioned supply chains in the June services PMI.
The economy is still growing. It is also paying more attention to bottlenecks, labor discipline, and the cost of building the AI future in steel, copper, power, and HVAC units.
The U.S. trade deficit widened sharply in May, moving from $54.6 billion in April to $77.6 billion. Imports rose while exports fell, with the goods deficit reaching $106.5 billion and the services surplus increasing to $28.9 billion, according to the BEA trade release.
The market wrinkle is why imports rose. Capital goods imports, including AI-linked equipment and components, helped drive the widening. That can weigh on GDP math in the short run, but it also says companies are still spending heavily on infrastructure. The AI trade is therefore doing two things at once: lifting market narratives and pulling more physical equipment through ports, balance sheets, and supply chains.
Oil markets spent part of the week absorbing more supply. OPEC+ approved another production-target increase for August, while crude prices traded near pre-conflict levels as exports through the Strait of Hormuz continued to recover in the latest OPEC+ decision.
Then geopolitics reminded everyone why oil markets rarely stay boring for long. Reports of renewed maritime tension near the Strait of Hormuz pushed Brent higher Tuesday, even as broader supply signals leaned easier. The result is a market caught between barrels returning to the system and risk premiums refusing to leave the room, as seen in Tuesday’s global markets reaction.
For inflation, that distinction matters. More supply helps. A fragile shipping lane keeps energy risk alive.
The U.S. men’s World Cup run ended Monday night in Seattle with a 4-1 Round of 16 loss to Belgium, a brutal comedown after a tournament that had finally pushed American soccer into the center of the summer sports calendar. Malik Tillman briefly gave the crowd life, but Belgium answered quickly, punished U.S. defensive mistakes, and moved on to a quarterfinal against Spain after the lopsided knockout win.
For the U.S., the exit stings because the backdrop was bigger than one bad night. Home soil, a deepening player pool, and a country fully awake to the tournament made this feel like a moment to cash in. Instead, Belgium turned the match into a reminder that enthusiasm can fill a stadium, but composure still wins knockout soccer.
But hey, at least Europe got a good ol’ Big Gulp of what makes America truly ’Murica: Buc-ee’s, Chili’s, and HOV lanes for our Hummers.
Maybe we’re not the cultural disaster they thought we were.