Good morning! History is an instructive guide for analyzing markets, and right now a handful of indicators are all pointing to the sky. The data suggest reasons for optimism, and investors have re-positioned accordingly.

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Historic outperformance

It wasn’t long ago markets flirted with bear market territory.

Now, they’re acting like boom times are inevitable. 

With the third quarter underway, the S&P 500 is outperforming its own historical patterns across multiple levels of analysis. This stems from a combination of factors including softening tariff fears, enthusiasm for Fed rate cuts, and stimulative policy from Washington.

As Opening Bell Daily has reported, July tends to be the strongest month in post-election years, which have seen an average annual return of 7.9% since 1950.

The S&P 500 is currently outpacing its typical post-election year, as the chart below illustrates. 

What’s more, stocks have finished higher in July for 10 years in a row, according to Ryan Detrick, chief market strategist for Carson Group. 

And compared to the typical first-half of any calendar year, 2025 is ahead of schedule.

The index has returned 9.48% annually since 1950, and the roughly 5.5% year-to-date gain in 2025 is better-than-average. 

But it’s not just seasonality or technical momentum driving stocks. The macro backdrop has shifted dramatically. 

“For all the many, many, headlines of ‘unprecedented’ events this year, global/US equity markets have generally performed well,” said DataTrek Research co-founders Nicholas Colas and Jessica Rabe.

“Yes, there was a bit of drama for a few weeks in April. But…as we push off into the second half of the year, investor confidence is high and everything broadly looks right with the world.”

Notably, the S&P 500 is coming off two consecutive years of more than 20% returns — a rare feat that’s happened just six times in the last century.

Historically, the year that follows averages an 8.2% gain. 

The index in 2025 is currently on track to beat that.

“We see reasons to expect this bull market to continue and the strength the last two months only further confirms this,” Detrick said.

To Tom Essaye, who publishes Sevens Report Research, the return to record highs reflects the absence of stagflation.

Economists have warned all year that tariffs would crimp growth and reignite inflation, yet the data haven’t cooperated with that narrative. 

“The market now believes that any inflationary effects of the tariffs will be more than offset in the data by cooling housing and energy prices,” Essaye said.

“As a result, neither CPI nor the PCE Price Index will rise materially.”

Should that outlook come to fruition — which Opening Bell Daily believes is likely — it would mark another win for the bulls and push the bears’ worst-case scenarios even further into the rearview.

Market snapshot

Elsewhere

📉 Hiring is slowing to multi-year lows. JOLTS data out Tuesday showed layoffs dropped by 188,000 in May, but the number of new hires also fell by 112,000, which is significantly below pre-pandemic levels. ISM data also showed Tuesday manufacturing remains in contraction territory and the sector has slowed hiring. (Axios)

❌ Elon Musk and President Trump keep feuding. Musk continues to criticize Trump’s spending bill, and Trump floated the idea of nixing the government subsidies to Tesla and other businesses in Musk’s empire. Musk seemed unbothered, though Tesla stock tumbled in response. (CNBC)

🤝 White House trade deals are changing in scope. The president’s negotiation team is no longer aiming for big agreements with countries, but instead smaller, quicker deals ahead of the July 9 deadline. These mini deals could help countries avoid harsh levies but partners would still face existing tariffs as talks continue. (Yahoo Finance)

🏦 Jerome Powell still wants to wait and see on policy. The Fed is still not sure how tariffs will show up in inflation data in the second half of 2025, and Powell said Tuesday that he wants to keep options open before more rate cuts: “We’re simply taking some time.” (WSJ)

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Last thing

About me

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day — unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else.

Feedback? Reply to this email, ping me on X @philrosenn, or write me directly at phil@openingbellmedia.com.