The VIX closed at 17.65 on June 30. Treasury yields climbed across the curve. ADP and ISM Manufacturing print this morning, and both hit the tape before the Fed's July 29 rate decision.
What Are Markets Signaling on July 1, 2026?
Equities carried into July with modest momentum. The S&P 500 closed June 30 up 0.79%. VIX settled at 17.65, down from the 18.41 close on June 29. Yields moved higher across the curve. Equity markets are not pricing the same risk as the rates market, where CME FedWatch now shows 29.9% odds of a July 29 hike. One of these reads will need to adjust before July 2 NFP.
What Does the ADP Forecast of 118K Signal for the Labor Market?
ADP June Employment Change prints at 8:15 AM ET today, with consensus at 118K versus 122K in May. A print below 100K would pressure the soft-landing narrative. A beat reinforces the five-consecutive-beat streak in JOLTS, which hit 7.594M in May. The labor market has not been cooperating with rate-cut models. Today's ADP is the last major indicator before July 2 NFP at 8:30 AM ET.
May ADP came in at 122K against a consensus near 110K. May NFP followed at 172K versus an 85K consensus. If June ADP repeats that pattern, the July 29 FOMC hike probability will not stay at 29.9%.
What Does the ISM Manufacturing Forecast Reveal?
ISM Manufacturing PMI releases at 10:00 AM ET today, with consensus at 53.8 versus 54.0 in May. ISM Manufacturing Prices are forecast at 77.7, down from 82.1. A reading above 50 signals expansion. A print at 53.8 is consistent with slowing manufacturing activity, not contraction. The Prices sub-index draws attention from Fed watchers, since a persistent above-70 reading conflicts with disinflation assumptions heading into July 29.
What Were the Biggest Market Movers on June 30?
Semiconductors and power management led gains. KLAC added 8.38%, ON rose 6.74%, and MPWR gained 5.46%. MSTR fell 6.20% as BTC sentiment stayed under pressure. DLR dropped 5.77% and T fell 5.13%. The session reflected rotation toward names with direct exposure to AI infrastructure buildout, away from rate-sensitive and crypto-adjacent positions.
Gap activity was sharp. SNDK gapped up 10.89%, BE added 10.07%, and AXON opened 9.79% higher. On the downside, NVCT gapped down 35.54% and CRCL fell 17.55%. Gap-down activity in small caps reflects stress in names with thin liquidity at the start of a new month.
What Does CME FedWatch Show for the July 29 FOMC Decision?
The Fed funds target sits at 3.50 to 3.75%. CME FedWatch shows 29.9% probability of a 25bp hike to the 3.75 to 4.00% band at the July 29, 2026 decision. The remaining 70.1% is priced for no change. Fed Chairman Warsh speaks at 9:00 AM ET today. His tone on labor market resilience will influence near-term positioning. A hawkish signal alongside a strong ADP print could move that probability quickly.
What Should Traders Watch Before the July 2 NFP Print?
July 2 NFP releases at 8:30 AM ET, moved up from the usual Friday slot due to the July 4 holiday. Average Hourly Earnings (m/m) are expected at 0.3%, flat with the prior reading. May NFP came in at 172K versus an 85K consensus, repricing the H2 rate path in a single session. July 2 carries the same weight.
FedWatch shows combined probability of at least one hike by September above 70%. A July 2 NFP beat holds that pricing. A miss brings rate-cut expectations back. The catalyst window runs from today's ADP at 8:15 AM ET through July 2 at 8:30 AM ET.
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