WEEK IN PERSPECTIVE: A big macro week ends on a high note (and the S&P 500 at 6,000)

That was quite the eventful week in the markets! The Musk-Trump feud over the reconciliation bill certainly made waves, especially with Tesla's stock taking a 14.3% hit. Despite the drama, the broader market held strong, with small-cap and mega-cap stocks leading the charge.

NVIDIA and semiconductor stocks were standout performers, helping push the S&P 500 back above the 6,000 level, buoyed by a solid May employment report. Interestingly, Treasury yields also rose sharply, with the 10-year note yield climbing to 4.51%, suggesting some rebalancing from bonds into equities.

On the macro front, OPEC+ agreed to raise production by 411,000 barrels per day in July, while the OECD downgraded its global and U.S. GDP growth forecasts for 2025, citing trade uncertainties. President Trump and President Xi had a phone call that seemed more conciliatory than combative, with plans for trade teams to meet again soon. Meanwhile, the ADP Employment Change Report showed weaker-than-expected job growth, with only 37,000 jobs added in May, and the ISM Services PMI dipped into contraction territory at 49.9%.

Musk’s vocal opposition to the reconciliation bill, urging lawmakers to "kill the bill," added another layer of intrigue. The European Central Bank cut interest rates by 25 basis points, possibly signaling the end of rate cuts. The trade deficit saw a sharp decline in April to $61.6 billion, driven by lower imports.

Looking ahead, Trump's trade representatives are set to meet with Chinese officials in London on Monday to discuss the trade deal. The market’s resilience amid all these developments suggests investors are still optimistic about economic growth, especially with the employment report reinforcing confidence in the U.S. economy’s trajectory.

Sector-wise, communication services (+3.2%), information technology (+3.0%), and energy (+2.2%) led the gains, while consumer staples (-1.6%), utilities (-1.1%), and consumer discretionary (-0.6%) lagged. The major indices all posted weekly gains, with the Russell 2000 up 3.2%, Nasdaq up 2.2%, S&P Midcap 400 up 1.7%, S&P 500 up 1.5%, and DJIA up 1.2%.

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