Stars, Stripes, and a $4 Trillion Tab

Market Report for Thursday, July 3, 2025

Stars, Stripes, and a $4 Trillion Tab

Wall Street celebrated American independence early with record highs, trillions in new debt, and a job market just soft enough to keep hope alive. Stocks surged into the long weekend with all the subtlety of fireworks in a drought—and about the same regard for fiscal safety.

Level Change 7/3/25 (%)
– – – – – – – – – – – – – – –
+0.8 Dow
+1.0 Nasdaq
+1.0 Nasdaq 100
+0.8 S&P 500
+0.7 S&P 400
+0.6 S&P 600

The big news—fittingly, Big and Beautiful—was the House’s final blessing of President Trump’s budget behemoth. After weeks of horse trading and procedural stunts (including Minority Leader Jeffries’ “Magic Minute” delay), the bill is now en route to the Oval, where it will no doubt be signed with a pen large enough to show up on satellite.

Estimates now put the bill’s cost at $4T over the next decade, a tidy upgrade from the modest $3.3T once assumed.

Maya MacGuineas of the Committee for a Responsible Federal Budget called it “the single most expensive, dishonest, and reckless budget reconciliation bill ever,” a quote which may soon be featured on commemorative July Fourth mugs.

But never mind the tab. The market saw an uncertainty made certain, and it saluted. Big, beautiful debt-ceilings-as-decor, here we come.

On the economic front, June payrolls came in hot enough to barbecue a rate cut.

Payrolls rose by 147K, topping the 118K consensus. Private payrolls, the soft spot, rose just 74K, but upward revisions to prior months kept investors smiling. Unemployment ticked down to 4.1%, a surprise, until you notice it was less thanks to jobs than to vanishing jobseekers. Call it full employment by subtraction.

Wages grew just 0.2% in June, with the annual pace down to 3.7%. That’s slow enough to comfort rate-cutters, not slow enough to convince them. Jobless claims came in below forecasts, and continuing claims didn’t move.

In all, strong enough to delay a July cut, weak enough to keep September on the table—though odds for that dropped from foregone conclusion to flip-a-coin territory.

Investors responded with gusto, driving the S&P and Nasdaq to new highs. The holiday-shortened week wrapped on an optimistic note: jobs up, wages easing pressure on inflation, and the Treasury about to get busy converting political ambition into sovereign debt.

Quite a week, capped by Wall Street toasting America with the bubbly confidence of someone else footing the bill. Future taxpayers: to your health.

Happy Independence Day. Kelly Letter subscribers, I’ll see you Sunday.

— Jason Kelly