U.S. Equity – The Wizarding Rally: Markets Defy Gravity Once Again

FILE PHOTO: The Charging Bull or Wall Street Bull is pictured in the Manhattan borough of New York City, New York, U.S., January 16, 2019. REUTERS/Carlo Allegri/File Photo – RC22FK9I2AA9

U.S. equity markets climbed to new heights despite mixed economic data and geopolitical uncertainty.

Investors appeared to brush off the U.S. May Personal Consumption Expenditures (PCE) index data, which showed that the index rose 0.1% month over month and 2.3% year over year, both in line with Reuters forecasts. Gains were no longer limited to mega-cap tech; the market breadth broadened, with Financials and Communication Services contributing to the rally.

Despite the rally, underlying caution looms as markets sail through an ever-changing macro backdrop. Elevated tensions between Federal Reserve Chair Jerome Powell and U.S. President Donald Trump over their stance on future rate cuts, combined with elevated tariff pressures and strained Canadian relations, could bloom into an environment where sentiment can shift quickly. However, optimism around artificial intelligence, resilient corporate earnings, and eased geopolitical tensions allowed equities to defy gravity again. The market took a slight detour from its green brick road, leading to the bell, before rebounding. This week—as the market is closing on a cautiously bullish stance—leaves investors wondering, “What’s next?”