Market Pulse with Dan Sheehan

Good Morning Investors.

The S&P 500 ($SPY ( ▲ 0.42% )) closed at 6,204.95 on Monday, decisively breaking through 6,200 and capping its strongest June since 2019 with a 0.5% gain. The Nasdaq ($QQQ ( ▲ 0.4% )) rose 0.5% to another record, while the Dow ($DIA ( ▲ 0.31% )) added 0.6%. These moves complete a remarkable 10.6% second-quarter surge for the S&P and nearly 18% for the Nasdaq, precisely the type of rolling recovery I positioned for as we emerged from April's volatility.

From AI infrastructure expansion to an accelerating dovish Fed pivot and strengthening rotation into Financials and Industrials, this setup isn't euphoric speculation, it's structurally sound and backed by converging policy tailwinds.

Futures are marginally softer this morning as we enter the second half of 2025. Dow futures slipped 0.1%, S&P 500 futures are down 0.3%, and Nasdaq-100 futures fell 0.3%.

Investors are digesting evolving trade headlines while positioning for a critical macro week. Canada’s weekend reversal on its digital services tax smoothed tech relations and injected fresh optimism into trade negotiations, though eyes remain fixed on Trump’s July 9 tariff deadline. Meanwhile, the dollar hovers near multi-year lows, and gold prices have firmed as traders hedge ahead of Fed Chair Powell’s ECB forum comments later today.

We’re in the final stretch toward Trump’s July 9 tariff deadline and the July 4 "big, beautiful bill" tax target. Canada’s last-minute decision to scrap its tech tax hours before implementation signals tangible progress. The U.S.-China trade framework appears solidified, and India's extended Washington negotiations suggest a less confrontational trade posture entering summer.

On taxes, Senate Republicans face internal divisions over Trump’s $3.3 trillion tax and spending bill, with concerns mounting about the long-term debt impact. Votes on dozens of amendments commence today, and while the final text remains fluid, corporate tax cut momentum persists. Goldman Sachs maintains its 5–7% boost estimate for S&P 500 earnings per share if corporate rates are reduced as proposed.

The Fed narrative continues its dovish evolution. This week's labor market data, particularly Thursday's jobs report, will prove pivotal. Today's JOLTS job openings are expected to show further decline, reinforcing cooling labor conditions. I maintain my September cut expectation, aligning with current market pricing at 93% probability.

Last week demonstrated clear leadership broadening beyond Technology. Financials surged over 3%, Industrials nearly 3%, and Consumer Discretionary about 2.4% — exactly the rotation pattern that sustains longer-term bull markets.

Circle's push for national trust bank status signals further stablecoin integration into mainstream financial infrastructure, supporting my thesis that crypto remains an essential risk-on barometer and payment innovation frontier.

Despite record highs, sentiment remains constructively skeptical. AAII data still shows more Bears than Bulls, and institutional players remain underweight. Younger retail investors continue leading flows, setting up potential forced institutional chasing as performance gaps widen.

No major exhaustion signals appear in DeMark or Elliott wave structures, while breadth improvements suggest any near-term pullbacks will be shallow and met with buying interest.

Bitcoin maintains its leadership role, consolidating around $107,000 after peaking at $112,509. I maintain my $150,000 year-end target, supported by growing institutional adoption and regulatory clarity. I anticipate an altcoin season to follow, with Solana (currently at $142.58) particularly well-positioned.

I remain overweight Technology, Semiconductors, AI Infrastructure, Nuclear Energy, and Financials given recent technical breakouts and emerging regulatory tailwinds. I expect Apple to deliver a catch-up move given its relative underperformance to other Mag 7 names. I'm also constructive on crypto, which has been in a holding pattern since Bitcoin's recent all-time highs. I expect the crypto market to take its next leg higher over the summer, with Bitcoin initially moving toward the $120,000 level while Solana and Ethereum deliver outsized moves as altcoin season materializes.

I remain underweight cyclical consumer sectors and low-margin industrials lacking AI leverage. Any short-term volatility should be viewed as accumulation opportunities rather than trend reversals.

This advance to new highs reflects a measured recognition of structural drivers: AI earnings power, dovish policy evolution, trade stabilization, and expanding sector leadership. It's not euphoric speculation — it's strategic positioning for fundamental shifts.

Historical data consistently shows that investing at all-time highs outperforms, with new highs typically followed by strong 1-year returns. With the S&P 500 now solidly above 6,200, I continue targeting 6,500 into Q4 as leadership broadens and policy tailwinds strengthen.

The convergence of AI infrastructure buildout, accommodative monetary policy, and trade stabilization creates a powerful foundation for sustained equity appreciation. Remaining invested isn't just prudent, it's essential.

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

Dan Sheehan

[email protected]

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