The S&P 500 climbed 0.8% on Tuesday (Wednesday AEST) to 7,499.4, capping its best quarter since 2020 and sending the index out of the first half of the year on a record close.
The Dow Jones Industrial Average added 0.3% to 52,319.2, a fresh record after the blue-chip index closed above 52,000 for the first time on Monday, while the Nasdaq Composite added 1.5% to 26,213.7, also posting its best quarter since 2020 as chip stocks extended the rally that has defined the entire first half.
The Philadelphia Semiconductor Index posted its best quarter on record, and the Russell 2000 added 0.5% alongside it.
Meanwhile, the VIX dropped 6.8% to 16.5, and gold slipped 0.2% to US$4,030.80 an ounce (oz).
Factors that moved the market
Three separate developments landed on the same trading day, each carrying its own weight for the quarter's close.
The U.S. Supreme Court blocked Trump's attempted firing of a Federal Reserve governor, with the court explicitly noting that central banking independence sits outside the reach of political interference, a ruling that removes, for now, a tail risk that had been working its way into rate expectations and term premia.
Investors also positioned for the prospect of U.S.-Iran peace talks opening in Qatar, with oil flows through the Strait of Hormuz recovering faster than markets had expected only weeks earlier.
Brent crude slipped below $74 a barrel while WTI fell below $70, both on track for a quarterly decline as the narrative shifted from supply shortage to oversupply.
Morgan Stanley cut its oil price forecasts on the back of that recovery, reinforcing the shift in tone across the energy desk.
The dollar's role
Dollar strength pushed the yen to a 40-year low, reviving speculation that Japanese authorities will step in to defend the currency, while HSBC's currency desk warned the dollar rally could turn explosive should the Fed signal it is prepared to tighten policy rather than cut.
That warning coincides with fresh data showing the Fed's preferred inflation gauge heated up in May, keeping a possible rate hike, not a cut, in play for the first time in some months.
A stronger dollar squeezes U.S. multinationals on the way through to earnings, and it tightens financial conditions for emerging markets that borrow in greenbacks, so the consequences of this move extend well beyond domestic equity benchmarks.
Labour market still the swing factor
Tuesday's JOLTS report showed U.S. job openings came in better than expected for May, at 7.6 million, though the hiring rate stayed low.
Openings holding up while hiring lags is consistent with employers reluctant to cut staff but slow to add headcount, a pattern that sets up Thursday's June jobs report as the next data point feeding directly into how traders price Fed rate moves through the second half.
