Last Week
A rebound in technology stocks, easing geopolitical tensions, and renewed hopes for interest rate cuts cheered investors as they headed to the celebration of our nation’s 250th birthday. Inclement weather across the country made BBQs and fireworks challenging. However, Joey Chestnut still braved the heat to win his record 18th Mustard Belt in Nathan’s Hot Dog Eating Contest. (North Star was a holder of Nathan’s Famous prior to its January 2026 acquisition by Smithfield Foods.)
The stock market got off to a strong start on Monday on headlines that the U.S. and Iran had agreed to pause hostilities and reopen commercial shipping through the Strait of Hormuz. Later in the week, the June jobs report showed the U.S. economy added just 57K jobs, well below expectations, leading traders to scale back expectations for another Fed rate hike this year and increase the odds of a rate cut before year-end. Fed Chair Kevin Warsh added to the holiday spirit by commenting that the inflationary pressures had recently eased, noting the significant decline in energy prices.
For the holiday-shortened week, the S&P 500 gained 1.8%, the Nasdaq Composite bounced 2.1% higher, while Small Caps finished slightly in the red. Nevertheless, it was the best first half of the year for Small Caps in over three decades. Higher earnings growth rates, a steady economy, and stable interest rates make the case for investing in small caps. Please visit the North Star Funds website for information about our strategies.
Advancing issues outnumbered declining issues by a factor of 4-3, with the Financial, Health Care, and Technology sectors performing the best. In contrast, the Telecommunications sector suffered a big drop, with Verizon shares having a difficult week. Gold rallied, the Dollar and Crude Oil weakened, and the yield on the 10-year Treasury climbed 11 basis points to 4.48%.
On the Chicago Sports Scene, the Cubs have won 7 of their last 10 games to stay in striking distance of the first-place Brewers in the NL Central, while the White Sox are playing well enough to sit on top of the AL Central with a one-game lead over the Guardians (formerly known as the Indians).
Outside of the economic data, there was no shortage of noteworthy headlines. Robinhood doubled down on its long-term crypto ambitions, unveiling tokenized stocks and plans for its own blockchain. Meanwhile, Alphabet lost its final appeal in Europe, leaving intact a $4.7 billion antitrust fine over Android’s app distribution practices. In artificial intelligence, the Trump administration lifted its temporary export ban on Anthropic’s latest model after the company strengthened safeguards against cyberattacks. Even the World Cup found itself at the intersection of sports and politics after President Trump reportedly placed a personal call to FIFA President Gianni Infantino, urging a review of U.S. striker Folarin Balogun’s red card suspension. FIFA subsequently suspended the automatic one-match ban, clearing Balogun to play against Belgium in a decision that sparked immediate controversy.
This Week
Investors will focus on the start of the second-quarter earnings season, the Federal Reserve’s latest meeting minutes, and, of course, the geopolitical developments.
Analysts are forecasting 23.3% earnings growth for the quarter, with PepsiCo’s results on Thursday the first highlight of the season. Corporate earnings growth has been extremely strong, outpacing the share price gains, reducing P/E multiples despite the market rally.
The Federal Reserve will release its June meeting notes on Wednesday, which analysts will dissect for any new clues on how policymakers are weighing inflation and interest rates.
Weekly jobless claims and the New York Fed’s consumer inflation expectations survey will provide fresh reads on the U.S. economy.
The stocks mentioned above may be holdings in our mutual funds. For more information, please visit www.nsinvest.com.