Major Indexes Pull Back After Record-Setting Quarter
U.S. equity futures are trending lower early Tuesday, July 1, 2025, as markets kick off the second half of the year with a cautious tone following an impressive second quarter. Futures tied to the Dow Jones Industrial Average slipped 60 points (0.1%), while S&P 500 futures declined 0.3% and Nasdaq-100 futures also fell 0.3%.
The pullback comes after Monday’s strong performance, which saw the S&P 500 advance 0.5% to post another record close, while the tech-heavy Nasdaq Composite also rose to fresh all-time highs with a 0.5% gain. The blue-chip Dow climbed 275.50 points, or 0.6%.
The major indexes delivered stunning returns in the second quarter, with the S&P 500 gaining 10.6% and the Nasdaq surging nearly 18% during the period. This remarkable comeback followed steep declines in April when markets approached bear market territory amid concerns over President Trump’s tariff policies.
Trade Tensions Remain Key Market Driver
Market sentiment received a boost Monday after Canada walked back its digital services tax in an attempt to facilitate trade negotiations with the U.S. This development came after President Donald Trump had threatened on Friday to “terminate ALL discussions on Trade with Canada.”
Investors are closely monitoring trade developments as Trump’s 90-day reprieve on his steepest tariffs is set to expire next week. The Senate is expected to continue voting today on President Trump’s “One Big Beautiful Bill,” which narrowly passed a key procedural vote over the weekend but faces an uncertain path in the House.
Despite current market caution, some analysts remain optimistic about the market’s trajectory in the coming months. “We think this is going to be a broader recovery,” Mike Wilson, chief U.S. equity strategist and chief investment officer at Morgan Stanley, said Monday. “With the Fed cutting in the second half of this year or next year, we can see a rolling recovery – because now there’s quite a bit of pent-up demand, particularly in those interest rate sensitive parts of the market.”
Global Markets Show Mixed Performance
Asian markets traded mixed Tuesday as investors assessed Wall Street’s record gains and the potential global impact of U.S. trade policies. Japan’s Nikkei 225 fell 1.24% to close at 39,986.33 after hitting an over 11-month high in its previous session. South Korea’s Kospi rose 0.58% to 3,089.65, while Australia’s S&P/ASX 200 ended flat at 8,451.10. Hong Kong markets were closed for a public holiday.
European shares struggled to gain momentum in early trading, with the pan-European Stoxx 600 hovering around 0.1% higher. Utilities stocks led industry gains with a rise of around 1%, while only the FTSE 100 among major bourses traded in positive territory, up 0.2%.
Premarket Movers: Winners and Losers
Several stocks are making significant moves in premarket trading. Among the biggest losers, HUYA Inc. (HUYA) dropped 34.66% to $2.30, while APi Group Corporation (APG) fell 31.75% to $34.84. Other notable decliners include Globavend Holdings Limited (GVH), down 20.61% to $0.09, and Professional Diversity Network, Inc. (IPDN), falling 20.12% to $2.70.
On the positive side, BioNexus Gene Lab Corp. (BGLC) surged an impressive 398.37% to $15.30 in premarket trading. Oragenics, Inc. (OGEN) jumped 116.23% to $8.26, while Wolfspeed, Inc. (WOLF) gained 91.20% to $0.76. Other notable gainers include Prestige Wealth Inc. (PWM), up 47.84% to $0.52, and Atai Life Sciences N.V. (ATAI), rising 29.22% to $2.83.
Tech Giants Face Mixed Outlook
Major technology companies, which have helped drive the market’s recent rally, are showing mixed performance. While specific premarket data for today is limited, Monday’s trading saw chip giant Broadcom (AVGO) up 2% and Meta Platforms (META) rising 1%, with Microsoft (MSFT) inching higher. Tesla (TSLA) shares were down 1%, while Nvidia (NVDA), Apple (AAPL), Amazon (AMZN), and Alphabet (GOOG) fell slightly.
Apple and Tesla have been the worst-performing stocks among the “Magnificent Seven” tech giants so far this year, with their shares down about 20% and 16%, respectively. Investors are watching for catalysts that could help these companies regain momentum in the second half of the year.
Financial Sector Shows Strength
Banking stocks showed strength on Monday following positive results from the Federal Reserve’s stress tests. Goldman Sachs (GS) and JPMorgan Chase (JPM) were up 2% and 1.5%, respectively, leading Dow advancers after the Fed’s stress test, released late Friday, showed that major U.S. financial institutions could easily survive a recession.
The yield on the 10-year Treasury note was at 4.27% on Monday morning, down from 4.28% at Friday’s close and near its lowest level since early May, potentially signaling expectations for future interest rate cuts.
Earnings Season Approaches with Positive Outlook
As the second-quarter earnings season approaches, more companies in the S&P 500 are issuing positive earnings guidance than average, according to FactSet. Out of the 110 companies in the broad-market index that have given quarterly EPS guidance for the second quarter, 51 companies have issued positive EPS guidance, which is above the 5-year average of 42 and above the 10-year average of 39.
However, earnings growth could be slowing down. FactSet’s analysis shows that the estimated year-over-year earnings growth rate for the S&P 500 in the second quarter of 5% could mark the lowest earnings growth for the index since the fourth quarter of 2023.
Market Outlook: Balancing Optimism with Caution
As markets enter the second half of 2025, investors are balancing optimism about potential interest rate cuts with caution regarding trade tensions and geopolitical risks. The market’s swift recovery in the second quarter demonstrates resilience, but the sustainability of this rally will depend on several factors including trade negotiations, Federal Reserve policy decisions, and upcoming corporate earnings reports.
Market sentiment has been boosted recently by a calmer geopolitical environment following a cease-fire between Israel and Iran, hopes for favorable trade agreements, and optimism that the Federal Reserve could cut interest rates in the coming months.
With major indexes near record highs, investors will be closely watching economic data and corporate earnings in the coming weeks for signs of continued economic strength or potential slowdown as they navigate the second half of what has already been a volatile but ultimately rewarding year for the markets.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.