In the early morning, the familiar cheers rang out

Source: Wall Street Intelligence Circle

Tonight is destined to be a sleepless night; every word from Walsh will directly determine whether the first move of the global market’s second half will be a “sprint” or “defense.”

At the close of the last trading day of the first half, Wall Street rang out with familiar cheers once more:

- U.S. stocks rose across the board: the Dow Jones Index gained 0.26%, the S&P 500 gained 0.79%, and the Nasdaq Index rose 1.52%;

- Gold prices barely maintained above $4,000;

- The U.S. dollar index edged higher, ending a three-day losing streak;

- Oil prices fell, with U.S. crude closing below $70—due to faster-than-expected resumption of oil shipments through the Strait of Hormuz, Morgan Stanley cut its oil price forecast for the second time in two weeks;

- U.S. Treasury prices fell, with the 10-year yield rising to 4.46%.

First, U.S. stocks posted the best quarterly results in nearly six years. Nasdaq rose 21% for the quarter, S&P 500 rose 15%, and the Dow Jones climbed 13%, making it the strongest quarter since 2020. The tech stock rally at the end of the second quarter differs from last year’s big-cap speculation—AI trades rotated internally, moving from pure speculation on concepts to those with substantial performance support, such as semiconductors, memory chips, and the AI infrastructure sector, improving the quality of gains. The true point of attention now is not whether AI can keep rising, but who can continue to push it higher. July has historically been a strong month for U.S. stocks, so ending the last trading day of the second quarter with strength acts more as a “momentum confirmation” for the market’s sentiment.

Second, gold’s ability to “barely maintain above $4,000” is a highly historic signal, as repeated failed breakdowns will attract more bottom-fishing funds. What will determine the next trend in gold is whether, after any breakdown, it can rebound quickly—this is more important than merely “holding $4,000.”

Third, the market previously traded on war, but is now trading the Fed again. With oil prices falling, expectations that inflationary pressures may ease are rising. The market currently sees a 33.7% probability of a 25 basis point rate hike at the Fed’s July meeting, and a 66.9% probability for a rate hike in September—these odds may change quickly in the next few days. The data that could truly drive the market higher in the future are not those that are particularly strong, but those that are “not weak enough to cause recession, nor strong enough to force the Fed to hike rates”—in other words, moderately strong.

Fourth, the ultimate tone setter for this week will be Walsh’s speech tonight (9:30 PM UTC+8) and Thursday night’s release of the U.S. June nonfarm payroll report. If nonfarm data comes in moderately strong, that would be the most ideal outcome. But if the data is strong again, the market’s expectations for further Fed tightening will heat up significantly.

Today is not the day when “the other shoe finally drops,” but a day when “expectations are stretched to the limit.” With U.S. markets closed for Independence Day on Friday, all the trading momentum that would have been released on Friday has been condensed into today and tomorrow.