US stock markets experienced an upward trend on Thursday, June 26, 2025, with futures for the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all ticking higher. This positive momentum brought the S&P 500 within less than 1% of its all-time high, continuing a robust rally that has seen the index climb more than 22% since its April low. The rally has been fueled by a combination of factors, including easing geopolitical tensions and a renewed focus on economic policies.

A significant driver of market optimism was the perceived de-escalation in the Middle East, with President Donald Trump confirming a ceasefire between Israel and Iran. While Trump expressed some dissatisfaction with the handling of the situation, the ceasefire appears to be holding, and an upcoming U.S.-Iran meeting next week could further stabilize global markets. Additionally, President Trump’s economic initiatives, such as the “One Big Beautiful Bill Act,” continued to be a focal point, influencing fiscal policy discussions and investor sentiment.

Adding to the market's positive tone was the speculation surrounding the Federal Reserve's leadership. President Trump hinted at a potential replacement for Fed Chair Jerome Powell, possibly by September or October, due to his dissatisfaction with Powell's cautious stance on interest rates. This prospect has boosted hopes for earlier interest rate cuts, leading traders to increasingly price in a more dovish monetary policy. The US dollar index reacted by dropping to its lowest level since April 2022, and Treasury yields pulled back, further indicating market expectations of lower borrowing costs.

However, recent economic data painted a mixed picture, which also contributed to the rate cut expectations. The US economy shrank by 0.5% in the first quarter, a final estimate worse than previous readings, raising concerns about underlying economic weakness. Furthermore, jobless claims rose, with continuing claims reaching their highest level since late 2021, suggesting a softening labor market. These figures bolster arguments for the Fed, or a new chair appointed by Trump, to consider rate cuts in the near term.

Several individual stocks saw significant movement. Nvidia (NVDA) continued its ascent, hitting another all-time high, driven by surging AI demand. Other top gainers included QuantumScape (QS), which soared on positive battery technology developments, and BlackBerry (BB), which rallied after beating earnings estimates. Conversely, some stocks faced pressure, with Paychex (PAYX) tumbling after missing revenue forecasts, and FedEx (FDX) dropping due to a weak outlook despite beating earnings. Tesla (TSLA) also slid, impacted by declining EV sales in Europe and price cut concerns.

Looking ahead, investors are keenly awaiting the Personal Consumption Expenditures (PCE) inflation report on Friday, which is the Fed's preferred inflation gauge. This report will be crucial in determining whether Trump's tariff policies have impacted consumer prices and could influence the timing of future rate cuts. While the current rally is encouraging, some experts, like Komal Sri-Kumar of Sri-Kumar Global Strategies, express caution, citing ongoing global tensions, the potential impact of Trump’s tariffs, and widening fiscal deficits as potential risks to the bullish trend. The market's sustainability will depend on how economic conditions and policy decisions unfold in the coming weeks.