U.S. Financial Markets Weekly Summary: Technical Analysis and Investor Sentiment (Week Ending June 28, 2025)

ST. LOUIS, MO (STL.News) US Financial Markets — The final whole week of June 2025 wrapped up with a mixed tone across U.S. financial markets, as investors digested hawkish commentary from the Federal Reserve, strong corporate earnings, weakening economic indicators, and ongoing global uncertainties. With the second quarter nearing its end, the broader market remained resilient, although technical indicators signal that caution may be warranted as volatility crept back into equity trading.

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This week’s market activity highlighted the growing divergence between economic expectations and asset prices, with equities struggling for direction, bonds flashing recession warnings, and the dollar experiencing renewed pressure. Below is a breakdown of key market developments, technical trends, and what investors can watch for heading into July.

Financial Markets – S&P 500: Rally Pauses as RSI Hits Overbought Territory

The S&P 500 ($SPX) began the week near all-time highs but saw increased profit-taking midweek, ending marginally lower at 5,455. The index posted a weekly loss of 0.4%, snapping a multi-week winning streak that megacap tech stocks had driven.

From a technical standpoint, the S&P 500 showed signs of short-term fatigue. The Relative Strength Index (RSI) hovered near 70 on Monday, a level typically associated with overbought conditions. As a result, traders experienced a mild pullback to the 20-day moving average (~$ 5,420), which held as key support. This level now becomes crucial for bulls to defend in the week ahead.

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MACD (Moving Average Convergence Divergence) showed a bearish crossover late in the week, suggesting momentum may be shifting to the downside. However, the longer-term trend remains bullish, as the 50-day and 200-day moving averages continue to rise in tandem — a signal of underlying strength.

US Financial Markets – Nasdaq Composite: Tech Titans Take a Breather

The tech-heavy Nasdaq Composite ($COMP) finished the week down 0.9% to close at 17,865, weighed by slight corrections in NVIDIA, Apple, and Microsoft. After surging nearly 20% YTD, the Nasdaq’s rally showed signs of consolidation.

Technical analysis revealed a textbook bearish divergence: while the index made higher highs earlier in the month, the RSI and MACD made lower highs, a classic warning sign of weakening momentum. The 10-day EMA, around 17,700, acted as short-term support throughout the week; however, a close below that level could accelerate selling pressure.

Volume was also notably lower this week, suggesting a lack of strong buying conviction — a red flag heading into the quarter’s end.

US Financial Markets – Dow Jones Industrial Average: Defensive Rotation in Play

Unlike its tech-driven peers, the Dow Jones Industrial Average ($DJI) fared slightly better, closing the week flat at 39,150. This performance reflected a modest shift into defensive sectors, such as healthcare, energy, and consumer staples.

The Dow remains within a consolidation pattern between 38,900 and 39,500. The Bollinger Bands tightened throughout the week, indicating a potential breakout may be near. A decisive close above 39,500 could trigger upside momentum, but failure to hold the 38,900 support area could lead to a retest of the 50-day MA at 38,300.

Traders are watching Fibonacci retracement levels from the March lows to the June highs, with the 23.6% retracement at 38,700 acting as initial support.

Financial Markets – Small-Cap Stocks Struggle to Keep Pace

The Russell 2000 index ($RUT), which tracks small-cap stocks, dropped 1.2% on the week to 2,030, underperforming the broader market. Rising borrowing costs and economic uncertainty continue to weigh more heavily on smaller firms that are more exposed to interest rate fluctuations and domestic economic weakness.

Technically, the Russell 2000 broke below its 20-day MA and is threatening a deeper pullback to its 50-day MA near 1,985. The Stochastic Oscillator crossed below 80, signaling potential for continued short-term weakness.

Relative performance versus the S&P 500 also weakened, as capital continues to favor large-cap growth names over cyclical plays.

Financial Markets – Treasury Yields Drop as Recession Fears Resurface

U.S. Treasury yields retreated across the curve this week, with the 10-year yield falling from 4.32% to 4.19% as investors rotated into bonds. The 2-year yield also dipped to 4.66%, narrowing the deeply inverted yield curve slightly.

The persistent 2s/10s inversion, which sits at over 45 basis points, continues to send a recession signal — a pattern that has historically preceded economic downturns with high accuracy. Meanwhile, the 3-month/10-year spread also remains inverted, reinforcing caution among bond market participants.

Technically, bond prices are attempting a breakout above resistance levels, and any further drop in yields could trigger bullish action in the TLT (iShares 20+ Year Treasury Bond ETF), which is back above its 50-day MA.

Financial Markets – U.S. Dollar Weakens on Global Pressure

The U.S. Dollar Index (DXY) slipped 0.7% on the week to finish near 104.10. This decline was fueled by growing speculation that the Fed may pivot dovishly later this year, alongside improved risk sentiment globally and a recovery in the euro and yen.

From a technical perspective, the DXY has broken below its 50-day MA and failed to reclaim its 200-day MA at 105.00. The descending triangle formation on the daily chart projects further downside if the index cannot hold the 103.80 support zone.

Traders are increasingly skeptical that the dollar can regain its dominance without a resurgence in inflation or new geopolitical shocks. Currency markets are now pricing in a 50% chance of a Fed rate cut by September.

Financial Markets – Commodities Mixed: Oil Slips, Gold Holds Gains

Crude oil (WTI) futures fell 1.5% on the week to settle near $80.75 per barrel, as inventories rose and global demand growth appeared sluggish. The technical pattern remains rangebound between $77 and $82. A break below $77 could signal a deeper correction.

Gold ($GLD) held firm above $2,320/oz, ending the week slightly higher as falling yields and a weaker dollar supported demand for safe-haven assets. Technical indicators show gold in a bullish flag pattern, with potential for a breakout toward $2,400 if macroeconomic uncertainty persists.

Financial Markets – Federal Reserve & Inflation Watch

Federal Reserve officials maintained a cautious tone this week. Fed Governor Michelle Bowman reiterated that the inflation battle is not over and that more data is needed before any rate cuts can occur. The market, however, is increasingly pricing in one to two rate cuts by year-end.

Core PCE data, the Fed’s preferred inflation gauge, is due out Friday. A lower-than-expected print could further bolster equities and weaken the dollar, while a sticky number could reinforce Fed hawkishness.

Financial Markets – Market Sentiment & Volatility Indicators

The CBOE Volatility Index (VIX) closed the week at 12.85, up from last week’s 11.90, suggesting a slight uptick in trader nervousness. Although VIX remains historically low, the move up from recent lows may hint at caution ahead of earnings season.

Put/Call ratios remained subdued early in the week but spiked on Thursday, reflecting increasing hedging activity.

The AAII Investor Sentiment Survey showed bullish sentiment dropped slightly to 41%, down from 47% the previous week, indicating some cooling of optimism as the rally matures.

Financial Markets – Key Takeaways and Outlook

Momentum Slowing: Equities may have hit short-term resistance levels, with overbought RSI readings and MACD crossovers signaling potential consolidation or correction.
Bond Market Warning: Inverted yield curves and falling Treasury yields reinforce recession concerns.
Dollar Weakness: A technical breakdown in the U.S. dollar could have broader implications for commodities and multinational stocks.
Rate Cut Speculation: Despite Fed resistance, markets continue to lean toward an easing cycle starting in the fall.
Sector Rotation: Defensive sectors are showing relative strength, while tech begins to consolidate.

Financial Markets – Final Word

While the broader bull market remains intact, the technical picture heading into July suggests caution is warranted. Investors are advised to monitor key support levels in the major indices closely, watch inflation data closely, and adjust their risk exposure accordingly. Volatility may increase as earnings season approaches and macroeconomic uncertainty lingers.

STL.News will continue monitoring these trends and provide up-to-date coverage of how economic data, central bank policy, and global developments are shaping market direction.

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