To The Moon

The U.S. stock market is currently nearing all-time highs as of late June 2025. Whether a "BIG July rally" is definitively coming is difficult to predict with certainty, as market performance is influenced by a multitude of factors that can shift rapidly.

In this article I would like to discuss on some of the indicators and analyst sentiments that can help inform our perspective.

July One Of Strongest Months For U.S. Equities Historically

It is looking like July could be a hot one— not just weather-wise, but on Wall Street too. Historically, July has been one of the strongest months for U.S. equities, with the S&P 500 averaging a 1.7% gain and finishing higher more than 60% of the time since 1928. This year, several tailwinds are aligning:

Rate cut optimism: Fed officials, including Vice Chair Michelle Bowman, have hinted at a possible rate cut as early as July, which has historically been bullish for stocks.

There is speculation about potential Federal Reserve rate cuts in the second half of 2025, possibly as early as July, if inflation remains contained. Rate cuts generally favor the stock market as they make borrowing cheaper for companies and consumers, and can increase the attractiveness of equities over fixed-income investments.

Geopolitical tensions easing: Despite recent flare-ups, markets have shrugged off Middle East concerns, and oil prices have stabilized, reducing inflationary fears. Ongoing geopolitical tensions (e.g., in the Middle East) can introduce volatility and dampen investor confidence. However, recent reports suggest a cooling of some tensions, which could be a positive.

Strong earnings expectations: Q2 earnings season is approaching, and analysts expect a 2.8% year-over-year EPS growth for the S&P 500. The start of Q2 earnings season in July will be a key driver. Strong earnings reports could fuel a rally, while disappointing results could lead to a pullback.

So what are the factors that could influence July Performance?

Factors Influencing July Performance

Inflation Data: Softening inflation readings could bolster the case for rate cuts, which would be seen positively by the market.

Economic Growth: While the U.S. economy has shown resilience, there are signs of slowing growth and some economists are projecting a more modest GDP increase for 2025 compared to 2024. A significant slowdown could temper market enthusiasm.

Trade Policies: Tariffs and trade negotiations remain a significant uncertainty. While some tariffs have been revised, the potential for further changes could impact corporate margins and economic growth.

Share Buybacks: Share buybacks tend to slow down as June ends, which might remove some buying pressure from the market until they resume in late July.

Seasonality: Historically, the May-October period has seen lower average returns compared to November-April, often attributed to lower trading volumes and mid-year economic slowdowns. However, this is a historical trend and not a guarantee.

Analyst Sentiment Raised With Higher Year-End S&P 500 Forecasts

Some Wall Street analysts have recently raised their year-end S&P 500 forecasts, becoming more optimistic about U.S. stocks. The median year-end target among 17 Wall Street firms for the S&P 500 is currently around 6,100, implying some upside from current levels.

There is a growing belief that small-cap and value stocks might outperform in a low-rate environment with stable economic growth, as seen in July 2024.

Potential Stocks to Watch (Based on recent trends and analyst mentions)

It is crucial to remember that past performance is not indicative of future results, and investment decisions should be based on thorough research and your own risk tolerance.

Here are some categories and specific stocks that have been mentioned in recent analysis:

Tech Giants (Magnificent 7/AI plays): These companies have driven significant market gains. While some analysts suggest a rotation out of "overpriced" mega-caps, many still see continued growth, especially with the ongoing AI boom. Maybe we can also consider Seasonal Momentum Plays

💡 Seasonal Momentum Plays

Tech & AI: $NVIDIA(NVDA)$, $Advanced Micro Devices(AMD)$, and Super Micro Computer are riding the AI wave and could benefit from renewed optimism and earnings momentum.

I am holding onto my Nvidia and AMD stocks while I think they also give opportunity for short-term momentum play.

For Nvidia, its long-term growth is underappreciated, moreover the consensus estimates for 2026 and 2027 "look conservative." As we can see Nvidia has cleared the consolidation, and is set for an daily uptrend continuation.

With strong momentum building upwards and it had created a new high, we can see that the bulls are in good control, I will be playing Nvidia on another account.

AMD investors sentiment was pretty bad when it was experiencing a downside, but I think as investors we should look at the potential and also use technical analysis to support this view.

As we can see from the technicals, AMD has broken out of its consolidation level, the bulls are in control and attempt to build a daily uptrend continuation have been successful, this has give investors confidence and we can see that the momentum have been consistently on the positive side.

Consumer Discretionary: Tesla and Nike have shown strength, with Tesla boosted by its robotaxi launch.

Financials: Northern Trust and Bank of New York Mellon are in the spotlight amid merger rumors.

🔍 Stocks with High Upside Potential

According to Kiplinger, these S&P 500 stocks have 50%+ upside based on analyst price targets:

Small-Cap and Value Stocks: If there's a shift in market sentiment towards a "soft landing" and potential rate cuts, these could see increased interest.

Specific examples from July 2024 data that performed well include: Real estate, Utilities, and Financials, as well as smaller companies overall.

Growth Stocks (Beyond the mega-caps):

Suggested Smart Plays To Your Strategy

July 2025 is shaping up to be a dynamic month for investors, and I think that our strategy should reflect both the macroeconomic backdrop and sector-specific opportunities.

We might want to consider some smart plays in our strategy.

📈 1. Lean Into Growth with Selective Tech & AI

With the Fed signaling a gradual rate-cutting path and inflation cooling, growth stocks—especially in AI, semiconductors, and cloud infrastructure—are poised to benefit. Think beyond the usual suspects like Nvidia and explore the broader AI ecosystem, including data centers, power utilities, and software platforms.

💰 2. Dividend Growth for Stability

In a market that’s still digesting macro shifts, dividend growers offer a cushion. Look at sectors like healthcare, consumer staples, and utilities, which tend to perform well in late-cycle environments and offer consistent income.

🌍 3. Global Diversification

Emerging markets, particularly in Southeast Asia and Latin America, are gaining traction as global supply chains shift and local economies invest in infrastructure and energy security. A globally diversified ETF or mutual fund could help you tap into this trend.

🧠 4. Factor-Based Investing

Use multi-factor ETFs that target value, momentum, and quality. These strategies are data-driven and can help you navigate volatility while capturing upside.

🛡️ 5. Defense & Security

With rising geopolitical tensions, defense stocks and companies involved in cybersecurity and autonomous systems are seeing increased investment. This sector could offer both growth and resilience.

🧪 6. Small-Cap Biotech

Large-cap pharma is increasingly turning to small-cap biotech for innovation. If you’re comfortable with higher risk, this space could offer outsized returns—especially as M&A activity heats up.

Summary

While there are factors that could contribute to a July rally, the market remains susceptible to various economic and geopolitical shifts. Staying informed and maintaining a well-diversified portfolio are key.

There are some short-term momentum plays that we can actually take advantage while maintaining our long-term portfolio, and we need to always ensure our portfolio is diversified across different asset classes and sectors to manage risk.

Appreciate if you could share your thoughts in the comment section whether you think July would present a rally and we can actually take advantage of some momentum play.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.