27.06.25 - Chasing highs, ignoring risks? Wall Street in summer mode
Markets have once again climbed to fresh record highs, with major US indices extending their gains as June draws to a close. The S&P 500, Nasdaq, and Dow all touched new highs this week, shrugging off persistent geopolitical noise and pockets of overvaluation.
What's fueling this seemingly chilled-out rally? A combination of softer inflation impulses and revived optimism around a potential Fed rate cut as early as September or even July. Adding fuel to the dovish narrative are growing rumors of a potential replacement for Fed Chair Jerome Powell later this year, possibly with a more accommodative successor.
Markets: US Futures continue to climb, European equity indices follow the US rally while China is lagging - US interest rates drop - profit taking in commodities and metals.
My view: This market feels almost too relaxed. With volatility compressing and equities grinding higher, Wall Street seems to have entered a phase of “detached optimism.” The cooling in oil prices and dovish Fed signals are enough to keep the party going for now, but complacency is creeping in.
From a strategic point of view, this sets up a tricky dynamic:
On one hand, the path of least resistance remains up, especially if institutional investors feel pressure to chase returns into quarter-end.
On the other hand, valuation risks are accumulating, particularly in tech-heavy indices that are already priced for perfection.
I remain cautiously tactical here, not chasing highs. The next meaningful market move may hinge on whether the Fed’s dovish tone translates into actual policy action, and on how Q2 corporate earnings shape expectations for the second half.
Let’s also not forget the unresolved tariff and trade negotiations, with a fast-approaching deadline on July 8. For now, summer calm prevails, but beneath the surface, key catalysts for renewed volatility are quietly gathering momentum.
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