In 30 seconds: The S&P 500 is experiencing a historic divergence between index-level performance and breadth, with the Magnificent 7 having their worst June on record while most other stocks and defensive sectors are holding up or hitting new highs. Oil transit through the Strait of Hormuz has partially resumed after a crisis peak, with WTI crude returning to pre-war levels around $69, while Chinese state buyers remain on strike and Persian Gulf oil inventories drain rapidly. Analysts are examining China's broad-based export surge and its impact on global trade balances, with particular focus on Europe's leverage over China, the weakening Korean won and Japanese yen, and the difficulty of redirecting Chinese surplus absorption away from major Western markets. Economists and market analysts are debating AI's economic implications, including its potential to boost productivity in aging economies like Germany, its crowding-out effect on interest-rate-sensitive sectors like housing, and whether AI-related stocks are in a bubble.
The S&P 500 closed at 7440.4302 on 2026-06-29, up 1.18% on the day. A fine number. But the index and the stocks inside it are, increasingly, two different conversations. U.S. equities are no longer trading as one index — they're trading as a collection of individual stories. The 1-year rolling correlation between the S&P Equal Weight index and the S&P 500 has collapsed to just 79%, the lowest reading on record, against a historical average of 96%. The S&P 500 was on pace for a record 6th consecutive day where price and breadth diverged. Two-thirds of S&P 500 constituents have outperformed the index itself, even as the index has risen. The Mag 7 is having a historically bad month in June specifically. The Mag 7 is no longer driving this bull market. Most stocks, meanwhile, are doing fine in June. The Russell 2000 sat at 3010.4167, barely changed at 0.01%. Within small caps, the non-profitable cohort of the Russell 2000 has been rolling over in favor of the profitable cohort after a relative surge earlier this year. Individual stories abound. Micron fell 4.5% on the session before bouncing 5% off its 10:15 AM ET low. Nike $NKE heads into earnings carrying back-to-back 10%+ drops on earnings reaction days, down 75% over the last five years. Nike has to be one of the most disappointing stocks of the 2020s. Survey respondents overwhelmingly believe AI-related stocks are in a bubble, though nearly half do not expect the bubble to burst within the next 12 months. Leveraged ETFs alone required $18 billion in daily rebalancing. The machine keeps running. It just no longer pretends to run in one direction.
WTI is back to a $69 handle — pre-war lows — as Hormuz reopens. Airlines are at new highs. The transit data tells a jagged story. On Wednesday, confirmed Hormuz transits hit a crisis high of roughly 60. By yesterday that number had collapsed to 12 transits in both directions. On peak days, single-day volumes through the strait topped 20+ million barrels. MEG loadings (10dma) are running at 5.5 million barrels per day, while loadings out of Red Sea and Fujairah add another ~7 million barrels per day. Over the past two weeks, roughly 60 million barrels of oil stuck in the Persian Gulf have drawn down at a pace of about 4.3 million barrels per day. That pace represents roughly half the Hormuz exits realized over the same period, with the other half coming from fresh loadings. Meanwhile, Beijing's oil buying strike continued. Unipec offered a key North Sea crude oil at its widest discount to the Dated Brent benchmark in six years — the last comparable level was during the peak of the Covid lockdowns in April 2020. Part of the backdrop is the US-Iran diplomatic track. A US-Iran MOU rushed to announce on Trump's birthday lacked the specifics and mutual understanding needed to be reliably durable.
The same Unipec driving Hormuz Reopens, Oil Prices Fall Back to Pre-War Lows is also a factor in China's Trade Surplus and Global Imbalances Under Scrutiny.
China's export surplus is large, and the question of who absorbs all that output is getting harder to answer. Europe occupies a peculiar structural role. It recycles its surplus in goods with the US and UK into demand for Chinese goods. This generates net demand for China without requiring large financial inflows. The US market remains an alternative to the EU market for China right now. Germany is feeling the squeeze, with autos accounting for roughly 40% of a 1 percentage-point-of-GDP fall in German exports to China. Samarium is a rare earth used in military radars and guidance systems, stable at high temperatures, and the US is fully reliant on China for its supply.
Building the infrastructure for AI costs real money right now, and that money has to come from somewhere. The logic is straightforward. AI capex requires enormous capital expenditure. Capital expenditure absorbs savings. Absorbed savings push up interest rates. Higher interest rates make it harder to build houses. You wanted a productivity miracle and you got fewer apartments. The economy, as always, is a budget constraint with better marketing. So the debate comes down to sequencing. AI might eventually deliver productivity gains large enough to justify the capital it is consuming today. Or it might just crowd out housing and leave the broader economy with a very expensive capital bill.
Here is what your weekly spend looks like right now.
Gas (per gallon): $3.91, down 3.41% on the week
Groceries (CPI food at home): 345.71, up 0.15% on the month
Eating out (CPI food away from home): 348.89, up 0.16% on the month
Average hourly earnings: $37.53, up 0.32% on the month