Weekly Market Recap | June 23–27, 2025
Markets Climb to New Highs as AI Optimism and Fed Steadiness Reignite Risk Appetite
U.S. equities extended their rebound this week, with the S&P 500 and Nasdaq both closing at record highs. A strong showing from AI-related names, an accommodative tone from the Federal Reserve, and a handful of upside earnings surprises helped push risk assets higher. Markets rallied each day, signaling a firm return to momentum as investors looked past geopolitical noise and embraced a favorable mix of policy, growth, and technology tailwinds.
Indexes Hit Record Territory as Breadth Improves
The S&P 500 rose 3.4% to end the week at 6,173.07 — its highest close ever. The Nasdaq added 4.2%, fueled by semiconductor gains and renewed confidence in the AI trade, while the Dow climbed 3.8% to finish at 43,819. Each major benchmark posted five consecutive days of gains, marking the best weekly performance since March. Under the surface, participation broadened out beyond megacaps, with strength in cyclicals and industrials reinforcing bullish sentiment.
| Index | Weekly % Change | Closing Level | YTD Performance |
|---|---|---|---|
| S&P 500 | +3.4% | 6,173.07 | +18.7% |
| Nasdaq Composite | +4.2% | 20,273.46 | +24.3% |
| Dow Jones Industrial Average | +3.8% | 43,819.00 | +12.4% |
| Russell 2000 | +2.1% | 2,082.47 | +9.8% |
| 10-Year Treasury Yield | –6 bps | 4.21% | +33 bps |
AI Momentum Reaccelerates on Micron's Forecast and Sector Rotation
Micron Technology set the tone early in the week after delivering an upbeat forecast citing surging demand for high-bandwidth memory tied to generative AI workloads. That release re-energized enthusiasm around AI infrastructure and reignited flows into semiconductors. Nvidia approached a $4 trillion market cap by Friday, with AMD and Broadcom following closely behind. Investors, once cautious on stretched valuations, are leaning back into the AI trade — not because of hype, but because the demand signals are beginning to validate the growth assumptions.
Meta, Alphabet, and other cloud-scale players also outperformed, riding the renewed confidence that enterprise AI adoption is not only persistent, but accelerating. In parallel, inflows into AI-themed ETFs reached their highest level since February, signaling strong retail and institutional interest.
Fed Holds Rates, Markets Embrace the Pause
The Federal Reserve left rates unchanged at 4.25%–4.50% and reiterated its data-dependent stance. The statement leaned modestly dovish, noting progress on disinflation while avoiding any firm guidance on future cuts. Fed Chair Jerome Powell emphasized that recent inflation prints — though not yet at target — are showing signs of meaningful softening, particularly in goods and housing. That language, while cautious, was enough to fuel optimism that rate cuts remain on the table before year-end.
Fed fund futures now imply a ~60% probability of a cut by the September meeting, according to CME data — a notable shift from the prior week. For equities, particularly long-duration growth names, the Fed’s wait-and-see posture provided welcome clarity.
Corporate Earnings Support the Rally
While earnings season is still in its early innings, several high-profile reports helped reinforce the bull case. Nike posted a strong fiscal Q4, sending shares up more than 15% after the company beat revenue and margin expectations and raised full-year guidance. Direct-to-consumer strength and leaner inventories contributed to both gross margin expansion and improved cash generation — a notable shift after multiple quarters of pressure.
Boeing added 5.9% following a Rothschild upgrade and signs that production delays may be stabilizing. On the downside, Coinbase fell nearly 6% after reports of ETF-related outflows and continued regulatory friction weighed on sentiment in the crypto space. Still, the broader takeaway was constructive: earnings revisions are firming, and key names are surprising to the upside.
Geopolitics Fade as Markets Focus on Fundamentals
Middle East tensions eased slightly this week after a temporary ceasefire agreement was brokered by the U.S., reducing near-term supply risks in the oil market. Crude prices fell 1.2% on the week, pulling the energy sector slightly lower, while volatility indicators such as the VIX declined for a third straight week.
Meanwhile, the trade backdrop remained choppy. President Trump abruptly paused negotiations with Canada over dispute clause disagreements but suggested progress with China was underway. Markets appeared largely indifferent to both developments, choosing instead to focus on domestic data and corporate performance.
Economic Data Reflects a Soft Landing Narrative
Key economic releases this week painted a picture of moderation, not deterioration. Housing starts declined modestly, driven by affordability headwinds and higher input costs, while permits held steady — signaling stabilization rather than contraction. Retail sales were softer than expected, but the underlying trend remains resilient, particularly in discretionary categories.
Importantly, core inflation cooled further, with shelter inflation flattening and durable goods prices declining for the second month in a row. This moderation is giving the Fed breathing room and validating the case for policy patience. Real GDP estimates for Q2 remain around 1.9% annualized, according to the Atlanta Fed’s GDPNow model — consistent with a soft landing thesis.
Sector Performance: Leadership Holds, Defensives Lag
Tech and consumer discretionary led sector gains, with semiconductors and retailers outperforming. Industrials caught a bid midweek, bolstered by Boeing and stronger logistics trends. On the flip side, utilities and staples underperformed as risk appetite returned and yield sensitivity diminished. Energy slipped slightly alongside oil prices, but longer-term supply dynamics remain tight.
| Sector | Weekly % Change |
|---|---|
| Information Technology | +5.1% |
| Consumer Discretionary | +4.4% |
| Industrials | +3.3% |
| Financials | +2.8% |
| Energy | –0.9% |
| Utilities | –0.4% |
The Week Ahead
Markets enter the final trading days of Q2 with strong momentum and falling volatility. Key catalysts in the coming week include ISM manufacturing data, payrolls, and early Q3 guidance from multinationals. With the Fed sidelined, AI back in the spotlight, and earnings sentiment turning more positive, the path of least resistance — for now — appears to be higher.
Still, risks remain: sticky services inflation, China’s uneven growth, and headline-driven geopolitical shocks could shift sentiment quickly. But barring a surprise, equities appear to have regained their footing — with tech leadership reaffirmed, macro data improving, and monetary policy aligned with asset prices.