US stocks hit a new high - the week ahead

It is a strange time to be an investor. In the past few months, markets have endured global trade shocks, war in the Middle East, and the emergence of Donald Trump’s ‘big, beautiful bill’, which threatens to rattle America’s public finances. And yet - as June draws to a close - stock markets are eerily unperturbed.
 
In fact, they’re positively buoyant. The S&P 500 hit an all-time high on Friday after cratering just a couple of months ago. The tech-focused Nasdaq is also trading at record levels, meaning the US is rapidly closing the gap with European stocks that emerged earlier in the year.
 
What’s going on? Are we back to business as usual? Or should investors be worried about the holiday atmosphere that is descending ahead of US Independence Day on Friday?

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Mixed signals  

Artificial intelligence has driven the latest stock market gains. After a tough start to 2025, chip giant Nvidia is the most valuable company in the world again after hosting an upbeat shareholder meeting. Micron, which supplies memory storage to Nvidia, also posted some impressive numbers last week.

The fragile truce between Israel and Iran is helping investors to relax too. When the US supported Israel by also bombing Iran’s nuclear sites, the price of Brent crude - the international oil benchmark - reached a five-month high of over $80 a barrel. It now sits around $67, as traders shrug off fears of further escalation in the region.

Meanwhile, the threat of a crippling trade war is retreating. The US has seemingly reached a deal with China, which promises to accelerate rare earth shipments. While the official pause on global tariff ends on 9 July, therefore, the market’s sense of dread has lifted somewhat.

Elsewhere, however, there are signs of unease. Investors have been abandoning long-term US bond funds, for example, due to fears about the impact Trump’s legislative plans could have on the country’s debt load. Trump wants to sign the One Big Beautiful Bill Act by the 4 July holiday, and the US Senate will begin voting on amendments today. The bill aims to extend tax cuts and reduce social spending.

Analysts are also on high alert for signs of recession, particularly after last week’s US GDP data underwhelmed. The US economy shrank by more than 0.5% in the first quarter of 2025, after a weak period for consumer spending.

“From ultra-strong growth in 2022-24, the US looks set to moderate appreciably over the medium-term,” investment bank Peel Hunt concluded.

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Milestones this week

It is a relatively heavy week for economic updates. A flurry of manufacturing and services data will arrive from the US and Europe in the form of Purchasing Managers Indices. PMIs are based on monthly industry surveys and broadly reflect whether sectors are expanding or contracting.

Central banks will also be scrutinising new US employment data - specifically the non-farm payroll - and fresh inflation data from the eurozone is due to be published too, after the European Central Bank cut rates to just 2% earlier this month.

Both the Federal Reserve and the Bank of England are in wait-and-see mode at the moment, having held interest rates earlier this month, so these indicators could prove crucial to future decision making. Given the state of the US stock market, investors seem to think lower rates are on the horizon.
 
Closer to home, the UK will publish its GDP figures for the first quarter of 2025. Results from listed retailers like Curry’s, Watches of Switzerland and Topps Tiles should provide a bit more colour on how consumers are holding up. We will also have more idea of what’s happening in the UK property market when Nationwide publishes its house price index on Tuesday.

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Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. This information is not a personal recommendation for any particular investment. Overseas investments will be affected by movements in currency exchange rates. Investments in emerging markets can be more volatile than other more developed markets. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.