| No images? Click here   By Megan Leonhardt | Tuesday, July 1 Meeting by Meeting. Stocks opened the second half of year in rather subdued fashion. The S&P 500 closed down 0.1%, while the tech-heavy Nasdaq Composite dropped 0.8%. The Dow Jones Industrial Average, however, was up 400 points, or 0.9%, boosted largely by individual healthcare components like UnitedHealth, Amgen, and Merck. Much of the weakness came from tech companies, which have an outsize impact on the S&P 500, including Tesla, Meta Platforms, and Nvidia. For Nvidia, in particular, the day's action might have been a chance for traders to take profits in the surging artificial intelligence stock. The choppy trading on Wall Street came after the U.S. Senate narrowly passed President Donald Trump’s tax bill. The legislation now faces an uncertain future in the House of Representatives, which will need to race to get the bill to Trump’s desk by his self-imposed July 4 deadline. As the tax bill moves ahead, any plans for lower interest rates likely remain stalled until September. During remarks today, Federal Reserve Chairman Jerome Powell declined to signal that the upcoming July meeting of the Federal Open Market Committee could provide relief. Powell avoided a direct answer when asked if the July meeting was a live one, my colleague Nicole Goodkind reports. “We are going meeting by meeting,” Powell said during the European Central Bank’s Forum on Central Banking. “I wouldn’t take any meeting off the table or put it directly on the table. It’s going to depend on how the data evolve.” After enduring weeks of Trump's public urgings to lower interest rates, Powell warned that the central bank's ability to cut rates is being complicated by the president's trade policies. “In effect, we went on hold when we saw the size of the tariffs and essentially all inflation forecasts for the United States went up materially as a consequence of the tariffs,” Powell said. Nicole noted that Powell received a "rare show of support from his global peers" at the forum, who made clear they agreed with the Fed's cautious approach to monetary policy amid the recent uncertainty. “I speak for myself, but I speak for all of my colleagues on the panel,” said ECB President Christine Lagarde. “I think we would do exactly the same thing as our colleague Jay Powell does.” The audience broke into applause. Read Nicole's full analysis of Powell's latest remarks here.  DJIA: +0.91% to 44,494.94 The Hot Stock: Las Vegas Sands +8.9% Best Sector: Materials +2.6%    Upside Surprises Obscuring Weaker Economic DetailsThe latest economic data came in better than expected—or at least when looking at the headline numbers. Job openings increased in May, contrary to expectations for a modest decline. The ISM manufacturing index also ticked higher by slightly more than expected in June. But under the hood of both reports, the details were less optimistic and show some weakening that's worth monitoring. Within manufacturing, the new orders and employment components of the survey declined. "While the headline increase was primarily driven by a jump in production and inventories, underlying domestic manufacturing fundamentals largely weakened," writes Neil Dutta, RenMac's head of economic research. Relatedly, construction spending fell by 0.3% in May after a 0.2% drop in April. Looking at the latest Job Openings and Labor Turnover Survey, layoffs remain a non-issue for the labor market. But on the hiring side of the equation, the data is more mixed than the headlines would suggest. "The May JOLTS report is a supreme testament to the unreliability of this dataset. Job openings surged, quits were up, and layoffs fell sharply. If we did not know better, one might think that it was 2022 all over again. Do not believe it for a second," writes Santander's chief economist Stephen Stanley. There were 7.8 million job openings in May, up from 7.4 million in April, largely driven by leisure and hospitality openings. Yet the strength of openings in this sector, which has been reliant on turnover picking up substantially in recent months, isn't enough to support the broader labor market, writes Citi senior economist Veronica Clark. "Increased churn could reflect issues with immigration concerns and deportations, with some businesses possibly over hiring in anticipation of changes to their immigrant workforce over the summer," Clark said. She noted that the total U.S. hiring rate fell again to 3.4% and that excluding leisure and hospitality, that is back to lows of last summer. "The kneejerk financial market reaction to these data was that they conveyed strength, with the ISM composite gauge slightly better than expected and the JOLTS figures denoting rigor in labor demand," Stanley said. "In my view, the ISM and construction spending figures both point to significant weakness and the JOLTS numbers should not be relied upon."  The CalendarADP releases its National Employment Report for June tomorrow. The consensus estimate is for a gain of 88,000 private-sector jobs, after a 37,000 increase in May. That was the slowest pace of hiring since May 2023, according to ADP.  What We're Reading Today
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