Fireworks Spark Amid Hot Jobs Numbers

Published as of: July 3, 2025, 9:23 a.m. ET

(Note to readers: U.S. markets are closed Friday, July 4, in observance of U.S. Independence Day. The Schwab Market Update will return on Monday, July 7.)

(Thursday market open) S&P 500 futures had a small rally in premarket action as the nonfarm payroll report was hotter than expected at 147,000 and the unemployment rate saw an unexpected drop to 4.1%. VIX futures dropped 1.89% but remain slightly elevated above the 18 level. However, the 10-year treasury yield had a bigger rally, climbing five basis points.

After both the S&P 500 index and Nasdaq Composite reached record highs on Wednesday, today's trading ends at 1 p.m. ET ahead of tomorrow's July 4 holiday closure. Trading volumes are expected to be light as investors head home early to light their BBQs. However, some volatility could be seen in the morning session as traders unwind positions ahead of the extended weekend.

Beyond the jobs report, attention could turn to tariffs and the budget process in Washington as the budget deadline is tomorrow and the tariff deadline is next Wednesday, though both are self-imposed by the administration. Markets may also remain concerned about potential additions to the national debt as the bill nears its final stages, given the non-partisan Congressional Budget Office's previous estimates of more than $3 trillion. After discussions with Republican holdouts stretched into the early morning, the bill is now headed to a final vote in the House, which is likely to be held this morning.

1. Jobs report deeper dive: Headline numbers were stronger than expected, lifting the market and investors' spirts. The economy added 147,000 jobs in June topping the 110,000 forecasted and last month’s 144,000. "Overall, it was a really good report all around," noted Cooper Howard, director and fixed income strategist for the Schwab Center for Financial Research. "The economy added more jobs than were expected and revisions were positive." The unemployment rate—which has been hovering between 4% and 4.2% since May 2024—fell to 4.1% despite expectations that it would rise to 4.3%. Digging a little deeper, the biggest gains were seen in state and local governments, while private-sector jobs growth was the weakest since last October.
    
2. What happens if July 9 comes without additional trade deals? Focus early next week might immediately turn to Wednesday's tariff extension deadline and what comes after. The Trump administration has hinted it could extend deadlines for some countries negotiating in good faith but hinted it might punish ones it doesn't agree with. Japan is one of the ones threatened this week by the president. "Are they going to start imposing tariffs on countries that they don't feel like negotiations are going well with?" said Michael Townsend, managing director of legislative and regulatory affairs at Schwab. "They have been supposedly having negotiations with all these countries, but they promised 90 trade deals in 90 days, and I think we have one at this point. I think that July 9 date is going to be a really, really important date to watch because companies don't know what the tariffs are going to be going forward from there. And I think that makes it very hard to plan and make decisions. It's another element of uncertainty for businesses of all types." The announcement yesterday of a trade deal with Vietnam put the administration one step closer, but trade policy with many other countries remains unclear. "On one hand, a trade deal provides incremental clarity and suggests potential for more deals in the coming days," observed Nathan Peterson, director of derivatives analysis at the Schwab Center for Financial Research. "But the 20% rate may be higher than expected and the economic impact is unclear."
    
3. Auctions, Fed minutes could shape yield path: Next week is a little light on data, but several important Treasury auctions are on the calendar along with minutes next Wednesday from the Fed's last meeting. A 3-year auction gets things started Tuesday followed by a 10-year auction Wednesday. If demand falls for debt on the block next week, it could push yields higher. Treasury yields popped yesterday despite soft private sector jobs data. Rising yields in the face of weak data could mean investors are concerned about growing levels of federal debt from the budget bill expected to pass the House this morning. Even so, odds of a rate cut rose yesterday after the weak data, to around 25% for a July move, according to the CME FedWatch Tool. Chances of at least one cut by September hit nearly 100%, but lower rates don't necessarily guarantee lower borrowing costs. Investors might want to check this after today's nonfarm payrolls report to see which way it moves.

• Nvidia (NVDA) and other Magnificent Seven stocks, hurt by the rotation out of big tech and communication services names yesterday, were mostly down again in early trading today.
   
• Tesla rose 4.73% yesterday despite a report showing a 14% year-over-year decline in vehicle deliveries last quarter, the second straight quarterly drop. Deliveries of 384,122 came up short of Wall Street's consensus for slightly above 390,000 and were down from 443,956 a year earlier.
   
• Datadog (DDOG) is up 11% in pre-market trading following last night's news that it will join the SPX next Wednesday. The software manufacturer is replacing Juniper Networks, which was newly acquired by Hewlett Packard Enterprise (HPE).
   
• Bitcoin (/BTC) was fairly flat in premarket trading after rising nearly 3.5% on Wednesday. Crypto-related stocks Coinbase (COIN) and Strategy (MSTR) advanced after both fell sharply yesterday. Circle Internet Group (CRCL) tumbled 8.18%.
   
• General Motors (GM) and Ford (F) rose 1.23% and 3.57%, respectively, despite U.S. total vehicle sales falling to a seasonally adjusted annual rate of 15.3 million units in June, down from 15.7 million in May.
   
• The S&P 500 index's relative strength index (RSI) is at 72.7 while the RSI for the Nasdaq-100^® (NDX) is 68.8. Typically, anything 70 or over is considered overbought, though crossing above that doesn't necessarily indicate weakness ahead. Market breadth has been strong, meaning there's a relatively broad base beneath the rally.

Technically, the S&P 500 index (SPX—candlesticks) saw a positive development on the charts this week as its 50-day moving average (blue line) climbed above the 200-day moving average (red line) for the first time since early April. That's known as a golden cross, and it's a technical signal that many traders consider bullish. The index is up 25% from the April low, but less than 6% year to date. When the 50-day crosses above the 200-day, it's sometimes seen as a positive technical signal, but it doesn't necessarily mean more strength ahead.

Check out the Investors' Calendar for a summary of the top economic events and earnings reports on tap this week.

July 4: Markets closed for Independence Day.
July 7: No major earnings or data expected.
July 8: No major earnings or data expected.
July 9: FOMC minutes.
July 10: Expected earnings from Conagra (CAG), Delta (DAL), and Levi Strauss (LEVI).