Nasdaq set to slip after Wall Street's strongest quarter since 2020

• The Nasdaq gained 1.5% to close the quarter at 26,213.7 points, while the S&P 500 rose 0.8% to 7,499 and the Dow Jones hit a fresh high of 52,319
• Cleveland Fed president Beth Hammack's hawkish comments about potentially needing 'higher interest rates to bring inflation back down to target' increased market expectations for rate hikes
• Markets now price in a 50% chance of a rate increase as soon as September, with Fed Chair Kevin Warsh's speech at the Sintra conference viewed as crucial for third-quarter sentiment

Market Summary: Nasdaq Set to Decline After Strong Q2 Performance

Market Overview:

US stock futures opened lower on July 1, 2026, following Wall Street's strongest quarter since 2020. Nasdaq futures fell 0.4%, while Dow Jones and S&P 500 futures declined 0.2%. The previous session saw strong gains: Nasdaq rose 1.5% to 26,213.7 points, S&P 500 gained 0.8% to 7,499, and the Dow Jones climbed 0.3% to a record 52,319.

Key Performance Metrics:

The S&P 500 delivered a 15.2% return for the quarter, driven primarily by a robust rally in semiconductor stocks. This marks the best quarterly performance since Q4 2020.

Market Drivers:

Investor caution stems from upcoming economic data releases and a scheduled speech by new Federal Reserve Chair Kevin Warsh at the Sintra conference in Portugal (9am ET). Deutsche Bank analysts noted sentiment shifted following strong US job openings data and hawkish comments from Cleveland Fed President Beth Hammack, who suggested "higher interest rates" may be necessary to control inflation.

Interest Rate Outlook:

According to CME's FedWatch Tool, market pricing shows an 83% probability of at least one 25-basis-point rate hike in 2026, with a 50% chance of an increase as early as September. This represents a significant shift in expectations following Hammack's comments.

Market Implications:

The cautious tone at the start of Q3 suggests investors are reassessing positions after strong gains, with Federal Reserve policy direction remaining the primary concern. Chair Warsh's speech is expected to provide crucial guidance on monetary policy trajectory.