WEEK AHEAD

As the curtain closed on another week, the U.S. equity market delivered a performance that demonstrates its resiliency, choosing to focus on the positives. In contrast, strategically sidestepping global anxieties, the week ending Jun 27, 2025, witnessed significant movements and shifts that warrant closer examination.

Market Highlights & Key Catalysts:

• S&P 500 Defies Gravity (and Geopolitics): Ignoring the ongoing nuances of the Israel/Iran conflict, the S&P 500 confidently marched to record highs last Friday. Emerging triumphantly from the "bear market lows" of early April, the index notched an impressive 3.45% gain for the week. This robust performance brings the S&P 500 and Nasdaq's year-to-date gains to a respectable +5.65% and +4.3%, respectively. The market, in its infinite wisdom (and perhaps a touch of selective hearing), decided to prioritize domestic cheer over international jeers.
• Crude Comfortably Cruising: Despite the persistent geopolitical rumblings from the Middle East and Ukraine/Russia, WTI crude oil remained comfortably anchored at $65 a barrel. While cooling tensions certainly played a part, it's increasingly clear that the U.S.'s burgeoning influence as the world's leading producer and supplier—now accounting for over 22% of global supply—is a significant stabilizing factor. Crude, it seems, has found its Zen, perhaps recognizing the U.S. as the new oil whisperer
• Tech Titans (Mostly) Reign Supreme, Apple's AI Quandary: Since the early April trade tariff woes, the Technology and Communication Services sectors have been undeniable leaders. However, not all tech giants enjoy the same limelight. Investors heavily weighted towards Apple stock have remained subdued. The Cupertino giant's year-to-date return stands at a disappointing -19.5%, a stark contrast to the stellar performances of NVDA (+17.5%), MSFT (+18%), and Meta (+25.5%). Apple's lackluster product releases, slowdown in China sales, and, critically, an unclear AI strategy have left investors scratching their heads. Furthermore, for those pundits who continue to overweight small-cap stocks, a painful lesson: small-caps lagged large-cap stocks by as much as 7.5% year-to-date alone (as evidenced by the performance difference between the Russell 1000 and Russell 2000 indices). It appears that, for now, size does matter, particularly when it comes to market capitalization.
• Fed Rate Cuts: Market expectations regarding potential rate cuts from the Federal Reserve gained considerable traction this week. This shift was primarily fueled by some notably Dovish commentary from various Fed Governors and a discernible narrative shift emerging from the Federal Open Market Committee (FOMC) minutes. The market, ever attuned to the Fed's subtle cues, seems to be increasingly pricing in a loosening of monetary policy.
• Treasury Yields Ease and Steepen: In response to the evolving narrative of rate cuts, Treasury yields eased across the board this week. This resulted in some steepening of the yield curve, as the front end of the curve declined relatively more than longer-dated yields. Specifically, 10-year yields are down approximately 11 basis points (from 4.37% to 4.26%), while 30-year yields saw a more modest decline of about 8 basis points (from 4.89% to 4.81%). The bond market, ever the sensitive soul, is clearly reacting to the prospect of a more accommodative Fed.

On the economic stage, one might observe a rather placid surface, but the question that haunts the discerning mind is whether this is the tranquil calm before a rather inconvenient storm. This past week's economic reports, those dutiful diarists of our collective financial reality, offered a few tremors beneath the surface: core PCE data stubbornly ticked above estimates, GDP gracefully bowed to a downward revision, and, most tellingly, Personal Income and Spending figures began to hint at a burgeoning exhaustion in the consumer spirit. Indeed, here's a highlight reel from these recent dispatches:

• Q2 GDP – 3rd Estimate:  Was revised down to -0.5% from a prior reading of -0.2%.
• PCE Prices: Headline increased 0.1% month-over-month (MoM), putting the year-over-year (YoY) gain at 2.3%, which were both in line with estimates.
• Core PCE Prices: Excluding food and energy, MoM increased 0.2% (above the +0.1% expected), which puts the YoY gain at 2.7% (above the +2.6% expected).
• Personal Income: -0.4% vs. 0.3%, worse than expected
• Personal Spending: -0.1% vs. +0.1%, worse than expected
• Consumer Confidence: 93.0 vs. 99.5 worse than expected
• Durable Orders: Rose 16.4% to an all-time high of $343.59B in May (and well above the +7.5% expected), primarily driven by orders for transportation equipment and accelerated purchases from tariffs.

Last week reinforced the market's remarkable ability to find silver linings, even amidst geopolitical clouds. While certain sectors and individual stocks continue to shine, the underperformance of others, particularly those lacking a clear strategic vision (ahem, Apple), serves as a poignant reminder of the importance of fundamental strength and forward-looking innovation. As we head into the July 4th week, all eyes remain on the Fed's next pronouncements, scheduled for July 29, and whether their flirtation with rate cuts evolves into a full-blown commitment.

Company Spotlight: Clouds, Chips, and Cash: Jabil's $500M Bet on the Future

Jabil (ticker: JBL), an electronic circuit board manufacturer, has recently captured investor attention by posting some of the most impressive gains in the S&P 500 following the release of its fiscal third-quarter results. The company's stock rose sharply in mid-June, breaking past previous highs and briefly trading above $205. This upward movement marked a standout performance, particularly as it coincided with broader market volatility.

The rally was fueled by a set of earnings that significantly exceeded Wall Street expectations. Jabil reported quarterly revenue of $7.83 billion, which exceeded analyst forecasts of approximately $7.1 billion. At the same time, adjusted earnings per share came in at $2.55, beating the consensus estimate of around $2.31. These results represent strong year-over-year growth in both top-line sales and bottom-line profits, reflecting strong momentum across key business segments.

A notable contributor to this growth was Jabil's exposure to infrastructure supporting artificial intelligence and cloud computing. These markets have become increasingly important for Jabil's contract manufacturing business, particularly as demand for data center equipment and next-generation computing hardware accelerates. The company also raised its full-year guidance, projecting $29 billion in revenue and $9.33 in core EPS, up from its previous estimates of $27.9 billion and $8.95, respectively.

Strategically, Jabil is taking steps to scale its operations in response to this demand. It announced a $500 million expansion of its U.S. manufacturing capacity, aimed at enhancing its ability to serve clients in cloud infrastructure and AI-related verticals. This move is expected to support long-term growth and deepen the company's involvement in high-performance computing supply chains.

Investor sentiment following the earnings report has been overwhelmingly positive. Several major investment firms, including Bank of America, raised their price targets for the stock, citing Jabil's strong positioning in high-growth sectors. The stock's performance is also supported by solid technical indicators, with strong relative strength scores and upward earnings momentum.

Looking ahead, analysts generally expect Jabil to continue delivering steady growth. Technical indicators indicate strong market momentum and relative strength (Source: Investor's Business Daily). Additionally, analysts' projections anticipate mid- to high-single-digit annual revenue growth, alongside even faster EPS expansion over the next few years, suggesting potential for further valuation gains (Source: Simply Wall St & TipRanks). While the company's AI-related revenue currently accounts for a smaller portion of its total business, it is widely regarded as a key driver of future growth.

Jabil's recent share price rally highlights not just a strong earnings quarter but also increasing investor confidence in the company's long-term strategy. With a solid foundation in key technology sectors, a proactive approach to capital deployment, and a consistent track record of operational performance, Jabil appears well-positioned for ongoing growth. However, it still faces several external risks—ranging from inflationary pressures and restrictive monetary policy to volatile global demand—that could strain supply chains in the industrial and electronics sectors. To maintain market momentum and fulfill growing client expectations, the company must effectively deliver on its planned manufacturing expansion.

Chart Source:  https://finance.yahoo.com/quote/JBL/