The U.S. economy showed steady traction last month, with growth holding up and hiring cooling but remaining stable. Markets delivered mixed results as inflation pressures persisted and financial conditions tightened quietly in the background. A shift in tone from the Federal Reserve under new Chair Kevin Warsh added to the evolving picture.

Below is a refreshed look at how major indexes moved and the forces that shaped those results.

Major U.S. Stock Indices

June delivered a noticeable split across U.S. markets following a strong quarter. Technology stocks, in particular, showed wide variation. Semiconductor names connected to artificial intelligence continued climbing, while several members of the Magnificent 7 experienced a pause after last year's substantial run-up.

• The S&P 500 declined modestly by 1.06%.
• The Nasdaq 100 edged slightly lower by 0.19%.
• The Dow Jones Industrial Average advanced 2.52%.

The Big Picture

Stronger Than It Looks. Economic activity proved sturdier than earlier estimates suggested. First‑quarter Gross Domestic Product was revised to 2.1% annualized, improving on the original reading of 1.6%. The revision pointed to firmer underlying momentum heading into the middle of the year. Manufacturing expanded for the sixth consecutive month despite the drag from tariffs and conflict‑related expenses. Consumers continued spending on a wide range of non‑energy goods even as fuel prices climbed, highlighting an economy with more staying power than many forecasts accounted for.

Cooling, Not Cracking. Job creation slowed sharply as employers added only 57,000 positions in June, falling short of expectations. The unemployment rate dipped to 4.2%, a 14‑month low, but the decline came largely because approximately 720,000 individuals left the labor force—a signal of reduced worker optimism rather than stronger hiring. Private‑sector data from ADP mirrored this moderation, showing businesses created 98,000 roles, though ADP noted a slight improvement in labor demand. Overall, the job market appears to be stabilizing rather than gaining momentum.

The Energy Squeeze. The Consumer Price Index release for May, issued on June 10, showed inflation rising to 4.2%, the highest level since 2023. The surge was driven largely by energy prices, which jumped nearly 24% year over year due to ongoing geopolitical tensions. Core inflation, which excludes food and fuel, also ticked higher to 2.8%, reflecting broader pricing pressures. Toward the end of the quarter, oil prices eased from roughly $95 to the mid‑$70s after a ceasefire between the U.S. and Iran allowed the reopening of the Strait of Hormuz. However, that pullback occurred after the CPI data was collected.

A New Chair, A New Tone. Kevin Warsh's first meeting as Federal Reserve Chair marked a clear policy shift. While the Fed kept interest rates at 3.50–3.75%, it removed its prior easing bias and eliminated forward guidance, leaning more hawkish. Warsh delivered a concise 130‑word statement—far shorter than his predecessor’s approach. Updated projections reflected higher inflation expectations, a lower unemployment outlook, and increased rate estimates for upcoming years. Nearly half of policymakers now anticipate another rate increase in 2026. Warsh opted not to publish his own forecast, signaling an emphasis on reducing reliance on lagging indicators.

The Road Ahead

Putting the pieces together, the economic narrative remains one of steady, if uneven, progress. Growth is holding, the labor market is softening without breaking, and inflation—though still elevated—appears contained. Meanwhile, markets continue to absorb the substantial gains powered by artificial intelligence themes.

As July unfolds, investors will be focused on new inflation readings, employment updates, and the upcoming Federal Reserve meeting scheduled for July 28‑29. Key questions include whether inflation continues easing and whether corporate earnings can keep up with current market valuations. The path of interest‑rate expectations will likely play a major role in how stocks and bonds trade through the rest of the summer.

This is an environment where careful monitoring continues to matter. We are watching these developments closely on your behalf. If you have questions about your strategy or portfolio positioning, feel free to reach out—our team is here to support you.