Trading Rotation Kicks Off 2nd Half of 2025

Tuesday, July 1, 2025

Markets were mixed on this first trading day of July, kicking off a holiday-shortened week. Off successive all-time closing highs on the S&P 500 and Nasdaq, both took a breather: -0.11% and -0.82%, respectively. The blue-chip Dow and small-cap Russell 2000, however, were able to catch up somewhat: +0.91% and +0.94%, respectively.

This was about as clear-cut and regimented a rotation play as we are likely to see: on the first day of the second half of 2025 (2H25), tech stocks lagged after a very strong first half of the year, while healthcare led the way. Amgen AMGN gained +4% and Merck MRK was up +3.4% in regular trading today, and the Dow is now -1% from its all-time highs.

Senate Republicans also passed the gigantic tax cut and immigration funding reconciliation bill by a tie-breaking vote from Vice President JD Vance. We already knew Rand Paul (R-KY) and Thom Tillis (R-NC) were “no” votes; they added Susan Collins (R-ME) but saw Lisa Murkowski (R-AK) vote for the bill in the end. Due to the changes made in the Senate, the bill must now re-pass the House before finding its way to President Trump’s desk for signing into law.
 

Economic Prints Informed Today’s Stock Market

The latest Job Openings and Labor Turnover Survey (JOLTS), for the month of May, came out this morning, with 7.8 million job openings jumping up from an expected further dwindling to 7.3 million from an upwardly revised 7.4 million the prior month. Job Quits and Layoffs/Discharges were little changed at 3.3 million and 1.6 million, respectively.

The highest level of job openings came from Accommodation/Food Service at +314K, followed by Finance/Insurance at +91K. The Federal Government was down -39K jobs in the month. A little more than three years ago, we saw a record-high headline of 12.2 million job openings. We continue to moderate these levels, at least as of May.

Both S&P final Manufacturing PMI and ISM Manufacturing data for June came in stronger than expected, with the S&P headline outpacing estimates by 90 basis points (bps) to 52.9 and ISM hitting 49.0% from an expected 48.6%. Construction Spending for May, on the other hand, fell -20 bps lower than projected to -0.3% from an upwardly revised -0.2% the prior month.
 

Constellation Brands Misses Q1 Estimates

Alcoholic beverage provider Constellation Brands STZ missed estimates on both top and bottom lines after today’s close, with earnings of $3.22 per share on revenues of $2.52 billion coming up short of $3.38 per share and $2.57 billion, respectively, on the Zacks consensus. Softer consumer demand led to lower results in wine and beer sales, but the company did reiterate its guidance for full-year revenues. Shares are down marginally on the news, but -24% year to date. (You can see the full Zacks Earnings Calendar here.)
 

What to Expect from the Stock Market Wednesday

The big report coming out tomorrow morning is the private-sector payroll tally from Automatic Data Processing ADP. Expectations are for something of a bounceback from last month’s paltry 37K new private-sector jobs filled: 100K is expected — still low from an historical perspective, but it would be an improvement from the trailing 4-month average gain of 82K. This level is borderline just enough to cover for Baby Boomer (and older GenX) retirees per month.

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