The main equity indexes gapped up, slumped briefly, then surged again to start a holiday-shortened week on a positive note. The Nasdaq Composite and the S&P 500 ended their respective five-session losing streaks during a risk-on rally that also lifted the Dow Jones Industrial Average to its first-ever close above 52,000.
“We typically rally into holiday weekends,” Louis Navellier of Navellier & Associates observes, “and it would be downright un-American not to be optimistic heading into the Fourth of July, especially considering it is the 250-year anniversary celebration.”
The U.S. stock and bond markets will close at 1 pm and 2 pm Eastern Time, respectively, on Thursday, July 2. And Friday, July 3, is a stock market holiday, with markets closed to observe the Fourth of July.
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As Navellier explains, the market is also benefiting from a realignment of the Russell 2000 Index and resulting demand for small-cap stocks and mid-cap stocks. “Additionally,” he writes, “SpaceX (SPCX, +7.2%) was added to the Russell 1000 at the start of the week.”
Navellier expects “fundamentally superior stocks” to enjoy a collective bounce “from institutional investors making their portfolios ‘extra pretty’ before they do their quarter-end reviews.”
Comcast breaks up
Communication services stocks paced the rally at a sector level after Comcast (CMCSA, +4.5%) announced a plan to spin off NBCUniversal and Sky into a separate publicly traded company.
“Comcast will continue to build on its leadership in connectivity,” co-CEO Mike Cavanaugh said in a statement announcing the split, “while NBCUniversal, together with Sky, will have the scale, brands, content and financial resources to compete as a premier global media and entertainment company.”
Charter Communications (CHTR, +9.4%), a rumored acquisition target for Comcast’s connectivity business amid a merger market that’s heating up, was among the top-performing S&P 500 stocks on Monday.
Another sector stalwart, Alphabet (GOOGL, +4.8%), was among the top-performing Dow Jones stocks during its first trading day as a member of that price-weighted index. Verizon Communications (VZ, -5.3%), removed from the Dow to make room for GOOGL, fell sharply.
At the closing bell, the tech-heavy Nasdaq Composite was up 2.1% to 25,820, the broad-based S&P 500 had added 1.2% at 7,440, and the blue-chip Dow Jones Industrial Average was higher by 0.6% to 52,182.
Will a World Cup stock score this week?
It’s a mostly quiet week on the earnings calendar, except for Nike (NKE, +1.8%). Down 35% year to date through Friday, one of Wall Street’s top World Cup stock picks will report fiscal fourth-quarter results after the closing bell on Tuesday.
Stifel analyst Peter McGoldrick is “not ready to call a bottom” for NKE stock. “Our thesis states dominant market position is unlikely to translate to value creation absent 1) a favorable change in consumer preference, or 2) a reinvigoration of the innovation pipeline at scale,” McGoldrick writes.
The analyst reiterated his Hold rating on the consumer discretionary stock but cut his 12-month target price from $56 to $50, citing lackluster performance and erosion of its share of the athletic market.
According to McGoldrick, “Investors will focus on FY27 guidance, capacity for topline growth, and EBIT margin rebound from trough levels in FY26.” At the same time, he notes, management has little incentive to raise expectations before its traditional investor day in the fall.
Supreme Court says the Fed might be exceptional
The Supreme Court ruled on Monday that President Donald Trump can fire Federal Trade Commissioner Rebecca Slaughter. But can President Trump fire Fed Governor Lisa Cook? Well, no, at least not yet.
Writing for a 5-4 majority in Trump v. Cook (pdf), Chief Justice John Roberts said the Trump administration’s interpretation of the law “would in effect transform the Federal Reserve’s for-cause protection into at-will employment — an interpretive leap out of step with the statute Congress enacted and our Nation’s tradition of central banking protected from political interference.”
But Roberts left open the possibility that Trump can remove Cook, pending the Fed governor’s case against the president in a lower federal court.
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“To be clear,” the chief justice explained, “the ultimate question of whether the President can remove Cook for cause will depend in part on the underlying facts. In this opinion, we have not addressed the facts, as they have yet to be found or analyzed under the relevant legal standards.”
In a separate 6-3 decision, the Court abandoned a 91-year-old precedent and expanded President Trump’s authority over (most) of the executive branch.
“If anything more is left of Humphrey’s,” Roberts wrote for the majority, referring to the 1935 decision in Humphrey’s Executor v. United States that established a principle of independence for federal agencies, “we overrule it.”