Wall Street’s Momentum Accelerates on Geopolitical Easing and Policy Clarity

Wall Street closed higher for the second consecutive session, with the Nasdaq 100 index reaching a new record close for the first time since February. Investors reacted positively to a combination of easing geopolitical tensions and dovish signals from the Federal Reserve. The ceasefire agreement between Israel and Iran helped calm nerves across global markets, while Fed Chair Jerome Powell indicated that the U.S. central bank could lower interest rates sooner than previously anticipated. This dual tailwind propelled U.S. equities to new highs, particularly in the technology sector, which thrives in a low-rate environment.

Quantitative Snapshot: Nasdaq 100 Up 30% Since April Low

The Nasdaq 100 index rose 1.53% to close at 22,190.52 points, officially surpassing its previous record closing level set on February 19. This marks a remarkable 30% rebound from the recent low of 17,090.4 points recorded on April 8. In comparison, the broader S&P 500 index added 1.1%, ending the session just 0.8% below its own all-time high of 6,144.15 points. The Dow Jones Industrial Average climbed 1.2%, reflecting broad-based strength in equities.

Bond yields declined notably, underscoring the market’s anticipation of future rate cuts. The 10-year U.S. Treasury yield dropped five basis points to 4.3%, while the more rate-sensitive 2-year yield also fell five basis points to 3.82%. These yield movements signal increased investor confidence in a near-term pivot by the Federal Reserve.

Tech Leaders Surge: Microsoft, Broadcom, and Netflix Set New Highs

The Nasdaq 100’s breakout was powered by mega-cap technology stocks. Microsoft hit a new all-time high on continued strength in its cloud services division. Broadcom surged to record levels, riding the ongoing AI wave and strong demand for its semiconductor components. Netflix also reached a new peak, supported by a resurgence in subscriber growth and favorable shifts in its advertising-supported business model.

Approximately 60% of Nasdaq 100 companies are now trading above their 50-day moving averages, suggesting that the rally is not limited to a few large names but rather represents a broader uptrend. The widespread participation across tech giants highlights growing market conviction that these firms will remain at the forefront of the next economic cycle.

Currency and Yield Trends: A Weaker Dollar Adds Tailwind

The U.S. dollar weakened against major currencies, adding another tailwind to large-cap multinationals. The dollar fell 0.3% against the euro, reaching $1.1617 per euro, and slid 1% against the Japanese yen to ¥144.75. The ICE U.S. Dollar Index, which tracks the greenback against a basket of six major trading partners, declined 0.5% and is now down 9.8% for the year.

This decline in the dollar enhances the value of overseas earnings for American tech companies, many of which generate substantial revenue from international markets. Combined with falling yields and easing inflationary pressure, the macro backdrop continues to favor high-growth sectors.

Fed Signals Rate Cuts: Powell Points Toward a Loosening Path

Federal Reserve Chair Jerome Powell testified before Congress, stating that the central bank would need more time to evaluate whether the recent U.S. tariff hikes will meaningfully raise inflation. However, he acknowledged that if inflationary pressures remain subdued, the Fed would be in a position to cut rates—“sooner rather than later.”

In response to a question during the hearing, Powell said he wouldn’t commit to a specific date but emphasized flexibility based on incoming data. According to CME FedWatch data, futures now fully price in two quarter-point rate cuts by the end of 2025, with an 85% chance of the first cut occurring in September. There’s even a 20% probability of a rate cut as early as July.

The Fed’s decision last week to leave its policy rate unchanged for the fourth consecutive meeting reinforced investor expectations for a shift in monetary stance, especially as inflation data remains benign and labor market indicators soften.

Strategic Outlook: A Recalibrated Environment for Growth Stocks

With yields falling, inflation expectations anchored, and geopolitical risk abating, the macroeconomic environment appears increasingly favorable for growth-oriented assets. Tech stocks, which often rely on discounted future cash flows, tend to benefit most when rates decline. The renewed appetite for risk is evident in the Nasdaq 100’s leadership and breadth.

Markets are now pricing in a shift from the defensive positioning seen earlier in the year to a more growth-focused approach. The rebound in tech stocks also suggests that investor confidence is returning, not just in the face of a dovish Fed, but due to improving corporate fundamentals as well. Companies like Nvidia, Apple, and Amazon are expected to lead a strong Q2 earnings season, further validating the recent rally.

However, the question remains whether this momentum is sustainable. Much will depend on upcoming macroeconomic data, including the June CPI and PCE inflation readings, as well as earnings results from key tech firms. A robust second-quarter earnings season could solidify the market’s trajectory and push the Nasdaq 100 to fresh monthly and yearly highs.

Looking Ahead: Watchpoints for July

Investors are increasingly optimistic, but a cautious tone prevails. With the Nasdaq 100 trading at historically high valuations, any negative surprises—whether from economic data or geopolitics—could spark short-term corrections. Upcoming catalysts include the Fed’s July policy meeting, key inflation prints, and labor market data.

If the Fed follows through on its dovish tone and cuts rates within the next quarter, the rally could continue through the second half of the year. Conversely, a reacceleration of inflation or disappointing tech earnings could trigger a pullback.

Market sentiment remains constructive, but the path forward will depend heavily on whether macro indicators continue to align with investors’ expectations for a soft landing and rate relief.