From MOMO to FOMO Stage of the Rally?

Brian Evans and Alex Harring of CNBC report S&P 500 closes at a record Friday, overcoming even more trade angst:

The S&P 500 hit fresh records on Friday as traders managed to look past new comments from President Donald Trump tied to U.S.-Canada tariffs. The broad market index’s rise new highs marks a sharp turnaround from the lows seen in April during the height of trade policy tensions.

The benchmark added 0.52% and closed at a record of 6,173.07. Earlier in the session, the S&P 500 rose as much as 0.76% to a high of 6,187.68, taking out its previous record of 6,147.43. The Nasdaq Composite, which also hit an all-time high and closed at a record, rose 0.52% to 20,273.46. The Dow Jones Industrial Average added 432.43 points, or 1%, settling at 43,819.27.

Stocks pulled back from their session highs after Trump said on Truth Social that trade talks between the U.S. and Canada were being terminated. Initially, investors had bid up equities after Commerce Secretary Howard Lutnick told Bloomberg News late Thursday that a framework between China and the U.S. on trade had been finalized. Lutnick added that the Trump administration expects to reach deals with 10 major trading partners imminently.

Friday’s sharp moves mark the latest episode in which Wall Street tries to navigate an ever-changing global trade landscape.

After rising to a new high in February on hopes for business-friendly policies from Trump, stocks tumbled as the president decided to instead implement stiff tariffs first. At its low in April, the S&P 500 was down nearly 18% for 2025. The benchmark began a stunning comeback after Trump walked back his stiffest tariff rates and the U.S. began negotiations for trade deals.

The S&P 500 is up more than 20% since reaching a nadir on April 8 and now up nearly 5% for the year. Along the way, investors kept buying despite a spike in oil prices spurred by the Israel-Iran conflict and a yield surge on deficit worries. A recovery in the artificial intelligence trade led by Nvidia and Microsoft helped fuel the comeback.

“I can see where the risks are here - if the trade [progress] is just hype from the White House and no deals are really forthcoming, then this market is going to roll over,” Thierry Wizman, global FX and rates strategist at Macquarie Group. “Ultimately, this all comes back to growth in the U.S. economy and growth of earnings.”  

Stocks curtail gains after Trump says U.S. is ending trade talks with Canada

The three major averages trimmed their earlier gains on Friday after President Donald Trump said the U.S. is ending all trade talks with Canada immediately.

The move was in response to Canada’s decision to impose a digital services tax on American tech firms, Trump said in a Truth Social post Friday afternoon.

“Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately,” he said. “We will let Canada know the Tariff that they will be paying to do business with the United States of America within the next seven day period.” 

Crypto stocks slide into the final weekend of the month and quarter

Crypto stocks slid to end the week amid some potential repositioning for quarterly portfolio rebalancing and general profit-taking heading into the final weekend of a winning month for the sector.

Among the crypto trading providers, Coinbase fell more than 5%, while Robinhood lost 1% and eToro dipped 2%. Crypto financial services firm Galaxy was lower by about 1%. Circle dropped 11%.

Amalya Dubrovsky , Karen Friar and Ines Ferré of Yahoo Finance also report S&P 500, Nasdaq notch record closes, brushing off renewed trade tensions: 

US stocks recovered on Friday afternoon to clinch fresh records despite renewed trade tensions after President Trump said he was terminating talks with Canada.

The S&P 500 (^GSPC) closed at an all-time high for the first time since February. The benchmark index was trading near record territory for much of the session over optimism on the trade front — the US and China clinching a trade truce — and hopes of a rate cut from the Fed sooner rather than later.

The Nasdaq Composite (^IXIC) also notched a record high. Meanwhile, the Dow Jones Industrial Average (^DJI) gained 1%, or about 400 points.

Stocks temporarily took a dramatic turn after Trump posted on social media that he was "terminating ALL discussions on Trade with Canada, effective immediately," citing Canada's digital services tax as the cause. He said he would set a new tariff rate on Canadian goods within the next week.

Markets had gotten a boost on the trade front on Friday after Trump said that the US and China have "signed" a trade deal. The two sides have cemented the tariff truce sealed last month in Geneva, and China has confirmed details of the agreed trade framework, per several media reports.

Under the pact, China has committed to delivering rare earth minerals to the US, Commerce Secretary Howard Lutnick told Bloomberg. Once that is underway, “we’ll take down our countermeasures,” he said.

Also on Friday, Treasury Secretary Scott Bessent on Friday said the US could complete the balance of its most important trade talks by Labor Day, raising hopes that the US wouldn't be firm on its July 9 tariff deadline.

Meanwhile, the Fed's rate path also remained in focus. The latest reading of the Fed's preferred inflation gauge showed price increases accelerated in May as inflation remained above the Fed's 2% target. Fed Chair Jerome Powell has stressed that an uptick in price pressures could be a stumbling block to a rate cut. That report also contained signs of an economic slowdown, however, which could further complicate the emerging debate between.

Fed rate cut and tech boom could lift markets but a choppy summer still looms, analyst warns

Despite recent gains in tech stocks, markets have largely traded sideways for seven months, Yahoo Finance's Francisco Velasquez reports. 

Velasquez writes:

After a roller-coaster first half for US stocks, investors hoping for smooth sailing in the back half of 2025 should hold off on celebrating.

Keith Lerner, co-chief investment officer at Truist, says the technical picture remains bullish, but valuations are stretched, and seasonal volatility could test investor resolve before year-end.

While July is historically a solid month, “August and September tend to be a little more challenging,” he said.

Long-term investors should stay in the market but keep expectations in check, especially as valuations near their ceiling. A softening Fed, steady economic data, and robust earnings from key sectors still underpin the bull case.

Read more here.  

Palantir shares hit a wall as Middle East conflict eases

Palantir stock (PLTR) dropped more than 5% Friday, after President Trump said during the NATO Summit that the conflict in the Middle East was “over" for now.

Trump added, "Can it start again? I guess someday it can. It could maybe start soon." 

Shares of Palantir had soared in early June after announcing a new $463 million contract to provide its AI software to the US Special Operations Command within the US military. The stock continued to rise after Israel first carried out airstrikes on Iran on June 12 and after the US carried out its own bombings on Iran’s nuclear sites later in the month. Palantir provides its AI software to the Israeli Defense Force.

“Shares of PLTR did seem to benefit from the tension and conflict in the Middle East, so with more quiet outlook for the region, PLTR may be giving some of those gains back,” DA Davidson analyst Gil Luria told Yahoo Finance.

In addition to the ceasefire between Israel and Iran, The Washington Post reports that there is a renewed push between Arab mediators and Israeli hostage families to negotiate an end to Israel's war on Gaza.

The drop also comes a day after protesters rallied outside of Palantir’s Palo Alto offices to oppose the company’s work with ICE amid Trump’s sweeping deportations.

In other news for Palantir, the company announced Thursday that it’s partnering with a nuclear power company, The Nuclear Company, to develop AI software to help build plants “faster and safer.” 

Chip stocks set to see growing benefit from rising AI spending, JPMorgan says

JPMorgan analysts said in a report following a survey of 168 chief information officers that artificial intelligence spending is set to jump over the next three years, with positive implications for chip stocks.

According to the survey, AI-related computing hardware as a percentage of CIOs' IT budgets is set to rise to 15.9% in three years from 5.9% currently, the analysts wrote.

“The survey results support our view of a strong multi-year spending cycle in the AI infrastructure build-out and should continue to support sustained strong revenue growth for the AI beneficiaries,” the report said.

Those beneficiaries include chipmakers Advanced Micro Devices (AMD), Broadcom (AVGO), Marvell Technology (MRVL), Micron (MU), Arm (ARM), and Nvidia (NVDA), as well as producers of high-performance networking products for AI data centers such as Astera Labs (ALAB).

The PHLX Semiconductor index (^SOX) has come roaring back since hitting a low in April. The index is up more than 14% over the past month.

Alright, it's Friday and it was another big week in the stock market led by large cap tech names like Amazon, Microsoft and Nvidia:

 

But if you look at year-to-date performance, it's Industrials (XLI), Communications Services (XLC), Financials (XLF), Utilties (XLU) and Information Technology (XLK) leading the charge:

 

 

In other words, yes, Microsoft and Nvidia are making new record highs but so is JPMorgan, Boeing and a bunch of other companies across all sectors.

 

Even more impressively, the move from April lows in some stocks is nothing short of astounding: 

 

And there's more, check out Robinhood (HOOD) and Roblox (RBLX) shares this year and how they surged from their April lows:

And remember Cathie Wood and Ark, how her ARK innovation ETF got destroyed after 2021, well, she's had a nice run since April lows:

Of course, if you look at ARK's top holdings, you'll understand why:

Ever since the post Liberation Day selloff, momentum ETFs have been on a rampage:

 And again, it's not just tech lifting these momentum ETFs higher, it's more broad based:

So, where do we go from here? I titled this post "From MOMO to FOMO Rally?" because the moves I am seeing in the stock market across many sectors is nothing short of astounding, almost as crazy as the big 1999-2000 tech rally.

The best way I can describe it is it feels like CTAs and quant funds have taken over the market and they're focusing on large and mid cap liquid names and driving them higher.

Do you chase this rally? A logical person will say the Nasdaq is up 37% from April lows, I'll wait for a nice correction.

But the algos keep hitting the bid, chasing stocks higher, forcing a lot of under-performing institutional funds to chase the high flyers higher.

It's insane and let me be clear, from my vantage point trading stocks, the pain trade remains up. 

Still, valuations are stretched and with earnings season around the corner, and a lot of uncertainty on the economic and geopolitical front, it will be interesting to see if MOMO will drive more FOMO.

It might, we might see a summer melt-up followed by a fall meltdown. Stay tuned!

Below, you'll find the top-performing US large cap stocks and all cap stocks this week (all data from barchart.com):

One last comment on US dollar weakness as people seem hysterical these days:

 

Astute analysts will note that there have been some major deals announced in Europe lately from US alternative fund managers and flows have favoured the euro.

I'm not a big believer that the US dollar is trouble here, it will come back and I wouldn't extrapolate recent weakness too far into the future.

Below, the CNBC Investment Committee debate whether the 'fear of missing out' is driving the market higher. Listen carefully to Bryn Talkington and Stephanie Link, they nail it here.

Stephanie Link and Brian Belski also debate how to trade Nike shares as the stock surges following their Fiscal Q4 report. Again, I agree with Stephanie Link, sell the rip on Nike!

Third, Ed Yardeni, Yardeni Research president, joins CNBC's 'Closing Bell' to discuss market outlooks, reactions to the U.S. terminating trade talks with Canada, and more.

Fourth, Dan Niles, Niles Investment Management founder and portfolio manager, joins CNBC's 'Squawk on the Street' to discuss market outlooks, earnings expectations, and more.

Fifth, Treasury Sec. Scott Bessent joins 'Closing Bell Overtime' to talk the Trump administration announcing it is ending all trade talks with Canada over a digital services tax.

Lastly, earlier this week, Philippe Laffont, Coatue founder and portfolio manager, joined 'Squawk Box' to discuss the latest market trends, state of the 'Magnificent Seven', future of tech investing, his thoughts on bitcoin, state of the economy, impact of AI technology, who'll come on top in the AI arms race, and more.Laffont also discussed he AI arms race, the Fed's interest rate policy, future of TikTok, the NYC mayoral race, and more.

Laffont founded Coatue Management in 1999. He is a so-called Tiger Cub, having spent time working at Julian Robertson's Tiger Management hedge fund. He's one of the best tech investors in the world and all of Canada's large pension funds are his clients. Worth listening to his views and scroll his latest holdings here. Enjoy your weekend!