At 8:15am ET, the Bloomberg terminal coughed up an unpleasant surprise. The ADP payroll number—Wall Street's appetizer before Thursday's official jobs feast—showed a loss of 33,000 positions. Forecasters had penciled in a gain of 98,000. The screen flushed scarlet; the sell buttons twitched. And then, almost nothing. The Nasdaq 100 futures sagged a perfunctory 0.2%, the digital equivalent of a raised eyebrow. Complacency has become the market's default setting. Weak data? That merely whets the appetite for rate cuts, now priced at roughly sixty-four basis points by year-end.

In seven days, on the 9th, President Trump's new tariff barrage goes live, unless Tokyo, Brussels, or New Delhi produces the diplomatic equivalent of alchemy. The President, sounding like a man with one eye on campaign rallies and the other on customs receipts, vows there will be "no extension" to the July 9 deadline. The world's supply chains have heard such vows before, and each time the costs seep, unseen, into consumer prices.

Today marks three months to the day since the famous “Liberation Day.” On Wednesday, April 2, Donald Trump sent shockwaves through the markets by announcing reciprocal tariffs. The image of the US president proudly brandishing his list of punitive measures will remain etched in our memories. So too will the panic that ensued, until the announcement of a pause a week later. Before this spectacular about-turn, almost no one would have bet that the S&P 500 would recover its losses in 30 days. Or that it would break records in three months.

Between April 2 and today, there was a 28% rise in the S&P 500. The index is now up 5.4%, after losing as much as 18% at its worst on April 7, which was the low point of the year.

And yet, nothing has really been resolved since then. We have no certainty about the level of tariffs, as trade negotiations are ongoing. Worse still, we already know that with the tariffs currently in place, the average entry ticket to the US is around 15%, compared with 2.5-3% previously. The impact on growth, inflation and corporate earnings is therefore still ahead of us.

Late Tuesday another wild card clattered onto the table: the Senate's passage of the "One Big Beautiful Bill", a sprawling tax-and-spend opus that trims social programs, fattens defense, and promises to add $3.3 trillion to the deficit. Once upon a time markets fretted about such arithmetic. Now they greet it as stimulus. The Dow, barely a percent off its record, is living proof that deficits are somebody else's problem—until bond vigilantes return from exile.

Meanwhile the Federal Reserve, chastened by stickier inflation and stronger-than-expected May job openings, insists that cuts will be "data dependent." What happens when the job data suddenly include a minus sign, like today's? If employment is stumbling before tariffs bite, can monetary policy really paper over both supply shocks and fiscal profligacy?

For years the American economy has floated on a Goldilocks narrative—growth neither too hot nor too cold, inflation docile, jobs plentiful. But Goldilocks now faces a trifecta: tariffs that could goose prices, deficits that could drive yields higher, and a labor market that may be losing altitude. Markets are responding with an almost literary form of denial.

In corporate news, Centene saw a 26 percent pre-market plunge after withdrawing its 2025 forecast offered a microcosm of the tension. All eyes will be on the non-farm payroll number that lands on Thursday— ahead of the July 4th holiday. 

In the U.K., British Finance Minister Rachel Reeves is in trouble after the government had to compromise on its welfare reform bill to pass it through Parliament. Meanwhile, Bank of England policymaker Alan Taylor warned that the UK's economic "soft landing" is now at risk, citing recent data that supports five interest rate cuts in 2025 instead of four. U.K. bond yields spiked sharply during the weekly parliamentary debate after Prime Minister Keir Starmer stopped short of offering full support for Reeves.

In Asia, the Nikkei 225 ended with a poor performance, down 0.5% this morning. South Korea, weighed down by the Nasdaq's decline, lost even more ground (-0.6%). Mainland China and India are stable. The best performers of the day are Hong Kong (+0.5%) and Sydney (+0.7%). European markets are mixed, with the Stoxx Europe 600 near zero.

Today's economic highlights:

On today's agenda: the unemployment rate in the eurozone; in the United States, Challenger job cuts, ADP employment change, and DOE crude oil inventories. See the full calendar here.

  • Dollar index: 96,550
  • Gold: $3,342
  • Crude Oil (BRENT): $67.76 (WTI) $65.69
  • United States 10 years: 4.29%
  • BITCOIN: $107,308

In corporate news:

  • Boeing to acquire Spirit AeroSystems' facility in Belfast, Northern Ireland.
  • Tesla sales declined in Sweden and Denmark, increased in Norway, Spain, and Portugal.
  • Goldman Sachs appointed Raghav Maliah as global chairman of investment banking and plans to increase its quarterly dividend by 33%.
  • Wells Fargo set to increase dividends and initiate buyback programs following Fed's stress test.
  • FTC conducting an in-depth review of SoftBank's acquisition of Ampere Computing LLC.
  • Centene plunges 25% in after-hours trading following a warning about its targets.
  • Intel's CEO is considering changing strategy for the group's foundry subsidiary.
  • Lululemon is suing Costco, alleging that the latter is selling products that imitate the look and feel of Lululemon items.
  • Warner Music plans to save $200 million by cutting jobs.
  • KKR is set to acquire Australian chicken producer ProTen from Aware Super.
  • Wabtec is finalizing the acquisition of Evident's Inspection Technologies division.
  • Teledyne is buying Maretron.
  • Adobe competitor Figma files for an IPO.
  • Rivian’s Q2 deliveries slid 22.7% to 10,661 vehicles as tariffs, high interest rates and cheaper hybrids hurt EV demand.
  • Google offered fresh search-result remedies to EU regulators ahead of a July 7-8 workshop to avert another antitrust fine.
  • The ADP report showed the U.S. private sector, tracked by ADP, lost 33,000 jobs in June, its first decline since March 2023.
  • Apollo and Didavid won EU clearance for their joint purchase of Spanish sports e-retailer Tradeinn.
  • CME Group reported Q2 average daily volume up 15% year over year to 30.2 million contracts.
  • Paramount agreed to pay $16 million to settle President Trump’s lawsuit over a “60 Minutes” interview, directing funds to his future library.
  • Hewlett Packard Enterprise closed its acquisition of Juniper Networks, expecting the deal to be accretive to non-GAAP EPS in year one.
  • Ingersoll Rand bought Termomeccanica Industrial Compressors and subsidiary Adicomp for about €160 million.
  • Netflix is in talks with Spotify to co-create music awards shows, live concerts and other unscripted content.

Analyst Recommendations:

  • Adobe Inc.: Rothschild & Co Redburn downgrades to sell from neutral with a target price reduced from USD 420 to USD 280.
  • Apple Inc.: Jefferies upgrades to hold from underperform with a price target raised from USD 170.62 to USD 188.32.
  • Centene Corporation: JP Morgan downgrades to neutral from overweight with a target price reduced from USD 75 to USD 48.
  • Keycorp: Baird downgrades to neutral from outperform with a target price of USD 18.
  • Landstar System, Inc.: Zacks upgrades to neutral from underperform with a price target raised from USD 111 to USD 161.
  • Ross Stores, Inc.: Jefferies upgrades to buy from hold with a price target raised from USD 135 to USD 150.
  • Schlumberger Limited: ATB Capital Markets upgrades to outperform from sector perform with a target price of USD 43.
  • Bwx Technologies, Inc.: President Capital Management Corp maintains its buy recommendation with a price target raised from USD 127 to USD 177.
  • Fortive Corporation: Seaport Global maintains its buy recommendation and reduces the target price from USD 82 to USD 64.
  • Franklin Resources, Inc.: Morgan Stanley maintains its underweight recommendation and raises the target price from USD 14 to USD 19.
  • Planet Fitness, Inc.: KGI Securities Co Ltd maintains its outperform recommendation and raises the target price from USD 102 to USD 123.
  • Rocket Lab Corporation: KeyBanc Capital Markets maintains its overweight recommendation and raises the target price from USD 29 to USD 40.
  • Royal Caribbean Group: Bernstein maintains its outperform recommendation and raises the target price from USD 290 to USD 360.
  • Sei Investments Company: Piper Sandler & Co maintains a neutral recommendation with a price target raised from USD 79 to USD 96.
  • Wayfair Inc.: Baird maintains a neutral recommendation with a price target raised from 33 to USD 52.