Markets Hit New Highs While Investors Look Beyond the Headlines
Week Ending July 3, 2026
Before we dive into the markets, a quick personal note. I took last week off to spend 12 wonderful days exploring Sweden with my family. It was a fantastic opportunity to unplug, recharge, and enjoy some quality time together. Now that I'm back, there is plenty to catch up on. The markets certainly did not take a vacation.
It was a shortened trading week ahead of the Fourth of July holiday, but investors still had plenty to digest. Diplomatic progress in the Middle East helped calm geopolitical concerns, a softer than expected U.S. jobs report shifted expectations for interest rates, and the major U.S. indexes climbed to fresh record highs.
Despite signs that the labor market is beginning to cool, stocks finished the week with impressive gains. Investors appeared encouraged that slower hiring could reduce pressure on the Federal Reserve to tighten monetary policy. At the same time, easing geopolitical tensions and continued enthusiasm for artificial intelligence helped support the broader market.
Once again, the market reminded us that it does not simply react to today's headlines. It looks ahead to what may come next.
Market Overview
Weekly Market Performance (June 29 to July 3, 2026)
- S&P 500: +1.77%
- Nasdaq Composite: +2.12%
- Dow Jones Industrial Average: +1.97%
- MSCI EAFE Index: +1.81
- S&P/TSX Composite Index: +1.32%
U.S. equities continued their strong momentum, with the Dow Jones Industrial Average reaching another record high during the week. Technology stocks led the market higher early on as investors continued to embrace companies benefiting from artificial intelligence. Some profit taking emerged later in the week as the new quarter began, but overall market sentiment remained positive.
In Canada, the TSX also posted gains. Financial stocks remained resilient, while industrials and energy companies benefited from improving investor sentiment. Canada's economy continues to face slower growth than the United States, but investors found reasons to remain constructive as global risk appetite improved.
Why the Market Moved Higher
The biggest driver of the week was improving investor confidence.
Markets opened higher after diplomatic efforts in the Middle East helped ease fears of a broader regional conflict. As concerns about potential disruptions to global energy supplies faded, investors became more willing to take on risk.
Economic data also played an important role.
The June employment report showed the U.S. economy added 57,000 jobs, well below economists' expectations and fewer than the previous month's gains. Under different circumstances, weaker hiring might have sparked concerns about the economy. Instead, investors viewed the report as evidence that the labor market is gradually cooling without deteriorating sharply.
That matters because a slower labor market could reduce inflationary pressures, giving the Federal Reserve greater flexibility to leave interest rates unchanged or potentially lower them later this year if economic conditions soften further.
Technology shares remained another source of strength. While investors rotated into other sectors later in the week, enthusiasm surrounding artificial intelligence and innovation continued to provide meaningful support for the broader market.
The Market Continues to Look Ahead
One theme continues to emerge this year. Investors are focusing less on today's data and more on tomorrow's possibilities.
The economy is slowing, but it is not showing signs of falling into recession. Inflation has moderated significantly from its peak, corporate earnings have remained resilient, and consumers continue to spend despite higher borrowing costs.
Taken together, investors continue to believe the economy may achieve the elusive "soft landing," slower growth without a severe downturn.
That does not mean the risks have disappeared. Inflation remains above the Federal Reserve's target, geopolitical tensions could quickly return, and economic growth continues to slow.
For now, however, investors appear willing to give both the economy and the market the benefit of the doubt.
What Canada Was Telling Us
Canada continues to face many of the same challenges as the United States, although economic growth has been somewhat softer.
The Bank of Canada has maintained its policy rate at 2.25% as policymakers balance persistent inflation pressures against slowing economic activity. Consumer spending, employment trends, and the housing market remain key areas of focus as officials assess whether additional policy changes will be needed later this year.
Trade discussions between Canada and the United States also remained in focus. Canadian officials continue to seek relief from tariffs affecting key industries, including steel, aluminum, and automotive manufacturing. Progress on those discussions could improve business confidence heading into the second half of the year.
While Canadian investors remain somewhat more cautious than their U.S. counterparts, last week's gains suggest confidence is gradually improving.
What the Week Really Meant
If I had to summarize last week in one sentence, it would be this: markets continue to reward resilience.
Economic growth is slowing. Hiring has become more measured. Inflation, while improving, has not completely disappeared.
Yet investors continue to focus on what is going right.
Corporate earnings remain relatively healthy. Inflation continues to move in the right direction. Central banks appear comfortable remaining patient. Geopolitical concerns also eased enough to allow optimism to return.
Markets rarely wait for certainty. They move when investors become more confident about the future than they are worried about the present.
That continues to be the message the market is sending.
Looking Ahead
This week brings several reports that could shape expectations for the economy and interest rates.
Investors will be watching the release of the Federal Reserve's June meeting minutes for additional insight into policymakers' thinking on inflation and future rate decisions. Weekly jobless claims will provide another update on labor market conditions, while trade data and consumer credit figures will offer clues about the health of the broader economy.
Corporate earnings season also begins to pick up, giving investors another opportunity to assess how businesses are navigating higher borrowing costs and slower economic growth.
If I had to sum up the current environment in one sentence, it would be this: investors continue to believe the economy can slow without stalling, and for now, the market is rewarding that optimism.
This Week: Key Economic Data
Monday, July 6
- PMI Composite
- ISM Services Index
- Three Month Treasury Bill Auction
Tuesday, July 7
- International Trade in Goods and Services
- One Year Treasury Bill Auction
Wednesday, July 8
- EIA Petroleum Status Report
- Ten Year Treasury Note Auction
- Federal Open Market Committee (FOMC) Meeting Minutes
- Consumer Credit
Thursday, July 9
- Weekly Initial Jobless Claims
- Existing Home Sales
- Federal Reserve Balance Sheet
- Speeches by New York Fed President John Williams and Dallas Fed President Lorie Logan
This Week: Companies Reporting Earnings
Tuesday, July 7
- PepsiCo (PEP)
Wednesday, July 8
- Delta Air Lines (DAL)
"For every man in the world functions to the best of his ability, and no one does less than his best, no matter what he may think about it"
– John Steinbeck
I lack lungs, yet I constantly need oxygen; I have no mouth, but sufficient water will drown me. What am I?
Last Week's Riddle: What force and strength cannot get through, it with gentle touch can do. People in many halls would stand were it not in their hand. What is it?
Answer: A Key
Gamla Stan, the historic Old Town of Stockholm, Sweden.
Footnotes And Sources
1. WSJ.com, July 2, 2026
2. Investing.com, July 2, 2026
3. CNBC.com, June 29, 2026
4. WSJ.com, June 30, 2026
5. CNBC.com, July 1, 2026
6. WSJ.com, July 2, 2026
7. WSJ.com, July 2, 2026
8. Buzzfeed.com, October 15, 2025
9. Healthline.com, April 14, 2026
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