Market Pulse with Dan Sheehan

Good Morning Investors.

The S&P 500 closed at 6,173.13 on Friday, reclaiming an all-time high for the first time since February and finishing the week up 3.5%. The Nasdaq climbed over 4.1%, while the Dow added 3.8%, each closing at new record highs. This caps a remarkable 23% rally off the April lows — precisely the environment I positioned for in Q1.

From AI infrastructure expansion to a dovish Fed and broadening market breadth, all the ingredients are aligning for a measured stride higher into year-end, not a euphoric leap. The setup is clear, and so is the path forward.

US stock futures are climbing to kick off this holiday-shortened week. Dow ($DIA ( ▲ 0.31% )) futures are up 0.5%, S&P 500 ($SPY ( ▲ 0.42% )) futures higher by 0.5%, and Nasdaq-100 ($QQQ ( ▲ 0.4% )) futures leading with a 0.7% gain.

Stocks are poised to start July on a strong note, driven by easing trade tensions and growing expectations for Fed cuts. Canada scrapped its planned digital services tax at the last minute on Sunday, smoothing US tech relations and advancing trade negotiations. Friday’s strong close saw the S&P 500 and Nasdaq both notch new records for the first time since February, fueled by diminishing tariff fears and accelerating AI momentum.

Progress on trade is providing the final push to new highs. Over the weekend, Canada scrapped its planned digital services tax targeting US tech firms just hours before it was set to take effect, a major olive branch in broader trade talks. Meanwhile, the Trump administration confirmed a trade framework with China is fully in place, and India has extended its Washington visit to finalize its own deal. The White House has signaled it does not expect to resume unilateral tariffs beyond the July 9 deadline, greatly reducing the risk of an abrupt trade shock this summer.

The baseline 10% tariff framework with strategic carve-outs continues to materialize. The May US-China agreement reduced tariffs from 145% to 30%, while Chinese tariffs dropped from 125% to 10%. This clarity supports multinational technology leaders and removes a key overhang.

My thesis for reaching S&P 6,500 by Q4 rests on four interconnected catalysts, each gaining momentum.

1. Trade stabilization with strategic clarity With concrete progress materializing and the July 9 deadline unlikely to trigger renewed tariffs, supply chain risks for semiconductors and cloud infrastructure are diminishing rapidly.

2. Fed’s dovish pivot accelerating Markets now price a 93% chance of at least one Fed cut by September, up from 70% last week. The shift is justified: Q1 GDP contracted -0.5%, core PCE is expected at 2.6% year-over-year for June, and Fed Governor Bowman has indicated openness to a July cut if inflation remains subdued. I maintain my September cut expectation, with this Thursday’s labor data (nonfarm payrolls expected at 110,000, unemployment ticking up to 4.3%) likely reinforcing the dovish case.

3. Tax reform as an earnings catalyst Senate negotiations on the proposed $4.5 trillion tax cut bill are heating up, with votes on dozens of amendments scheduled for Monday. The bill aims to further reduce corporate tax rates and incentivize domestic investment, echoing the 2017 cycle that propelled equities higher by 20%. Goldman Sachs estimates corporate rate reductions could add 5–7% to S&P 500 earnings per share. While the final text remains fluid, the direction is clear: policy is aligning to support earnings growth, capex expansion, and market multiples.

4. AI infrastructure: the multi-decade growth driver This isn’t just about chips — it’s about the full ecosystem transformation redefining business models and competitive advantage for the next decade.

Historically, we’ve seen technology dominate in this type of macro setup, and it remains foundational. But the real story last week was breadth.

Financials, the second-largest S&P 500 sector at 14%, broke out with a 3% gain. Industrials snapped back nearly 3%, and Discretionary rose 2.4%. This rotation is exactly what you want to see to sustain a rally. We are no longer reliant solely on the Magnificent 7. This broadening underpins the case for continued upside and signals we are likely in the early stages of a new bull market rather than an exhausted move higher.

Sentiment data continues to support this view. Despite the strong rally off April lows, AAII data shows more Bears than Bulls, and institutional investors, including hedge funds and CTAs, remain underexposed. Younger retail investors are stepping in aggressively, yet major institutional players remain on the sidelines. This dynamic sets the stage for further strength as larger players chase performance into year-end.

There are no active exhaustion signals from DeMark or wave structures, suggesting any pullbacks will be shallow and likely met with buying.

AI’s massive energy demands are reshaping power markets, with US data center consumption projected to reach 6.7–12% of total electricity demand by 2028. The administration’s May 23 executive orders to expand nuclear capacity to 400 GW by 2050 and streamline Small Modular Reactor licensing represent transformational policy shifts.

Constellation Energy at $320.17 ($100.3 billion market cap) and Holtec International, planning 10–20 SMRs with a $1.52 billion DOE loan commitment, are positioned as primary beneficiaries. Nuclear power has evolved into a technology infrastructure investment.

Bitcoin has consistently acted as a leading indicator, often establishing new highs approximately one month before the S&P 500. This pattern materialized twice in 2025: Bitcoin’s all-time high of $112,509.65 on May 22, followed by the S&P 500’s record close on June 27.

Currently trading around $107,000, Bitcoin remains resilient. Technical indicators suggest breakout potential toward my $150,000 year-end target, supported by accelerating institutional adoption and favorable regulatory developments. I see potential for an imminent altcoin season, with Solana at $142.58 particularly well-positioned given its scalability and expanding developer ecosystem.

Key upcoming catalysts include:

I remain overweight Technology (NVIDIA, Microsoft, Amazon), Semiconductors (Micron, AMD), AI Infrastructure, and Nuclear Energy (Constellation positioning for SMR expansion). Selectively long Financials given their breakouts and emerging structural tailwinds.

I continue to underweight cyclical consumer names and low-margin industrials without AI integration. Any near-term pullbacks should be treated as buying opportunities, not trend reversals.

This move to new highs reflects disciplined recognition of structural shifts: AI earnings power, dovish policy evolution, trade stabilization, and improved sector breadth. The convergence of these factors, not speculative euphoria, drives my conviction.

Historical precedent supports investing at all-time highs. Since 1950, the S&P 500 has established new records on 7% of trading days, with 1-year returns averaging 15% from such levels. Corrections exceeding 10% within a year occur just 9% of the time following new highs.

I continue to see the S&P 500 pushing toward 6,500 into Q4, supported by broadening leadership and policy tailwinds. This represents a measured stride along a structurally supported growth path.

Staying invested isn’t just advisable, it’s essential.

Please feel free to reach out to me on LinkedIn or by email if you would like help navigating this market environment or have any planning-related questions.

Dan Sheehan

[email protected]

This newsletter is for informational purposes only and should not be considered as investment advice. Please consult with your financial advisor about your specific situation.