By Teresa Rivas

Liberation Day might have been a stinker for the market, but Independence Day has been anything but, as stocks fought their way to all-time highs to close out the holiday-shortened week.

While the S&P 500 index gained 1.7% this week and the Nasdaq Composite rose 1.6% -- each closing at fresh records -- the comeback since the trade crisis has been even more impressive. The S&P 500 is up 26% from the selloff low on April 8, while the Nasdaq has surged 34.9%, as the worries, from supersized tariffs to the U.S.'s artificial-intelligence dominance, have slowly faded.

"One by one, all the tail risks that took the stock market nearly into bear market terrain in early April are being removed from the list," notes Rosenberg Research's David Rosenberg. "All it has taken is dodging bullets to bring the S&P 500 to new record highs as the momentum- and sentiment-driven market rally continues unabated."

Progress is being made just about everywhere. Wednesday brought a trade deal between the U.S. and Vietnam, one that includes 20% levies, down from 46%. Other deals, including one with India, are expected soon.

The latest agreement, however, was really about China, given that many of its goods are shipped to Vietnam before entering the U.S. It "confirms that countries...acting as transshipment hubs for Chinese goods, may face higher baseline tariffs and additional duties on rerouted products," notes Ulrike Hoffmann-Burchardi, UBS's chief investment officer of the Americas. "It also confirms a broader U.S. effort to ring-fence and curb perceived Chinese overproduction and excess capacity."

Why is that good news for markets? Any U.S. maneuver that could give it leverage ahead of next week's expiration of the pause in retaliatory tariffs with China should help get a deal done faster. If Vietnam is the stick, then the easing of some restrictions on exports of semiconductor design software to China could be the carrot.

That news, which broke last week, helped lift some stocks, including Nvidia, which was propelled to a market-beating week as the AI trade remained in vogue.

Yet the market didn't have to depend on trade for a boost. The Bureau of Labor Statistics said on Thursday that the U.S. economy added 147,000 jobs in June -- a figure that exceeded economists' expectations and was a counterpoint to the slightly worrying June ADP private payrolls number released Wednesday. It almost certainly means no July rate cut, but shows the economy is still going strong.

Not everyone was satisfied with the report, but it presented "a trifecta of positives that should send the labor bears back into hibernation: a drop in the unemployment rate, a solid beat on headline job creation versus consensus, and positive revisions to the prior two months," says Jeff Schulze, head of economic and market strategy at ClearBridge Investments.

Meanwhile the "Big Beautiful Bill" looks like a done deal. Sure, it only squeaked by in Congress, will add $3.4 trillion to the federal debt over the next decade, and sports a 60% public disapproval rating. Yet its passage is a win for the White House -- and Wall Street, which is hopeful the legislation can boost growth.

There may not have been fireworks, but the stock market gave investors plenty to celebrate on the Fourth of July.

Write to Teresa Rivas at teresa.rivas@barrons.com

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(END) Dow Jones Newswires

July 04, 2025 21:30 ET (01:30 GMT)

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