Stock market today: Dow, S&P 500, Nasdaq futures rise as Trump’s tax bill heads to House

Key Points

• It seems likely that the Dow, S&P 500, and Nasdaq futures are rising as Trump’s tax bill heads to the House, based on recent market data.
• The tax bill, known as “One Big Beautiful Bill,” passed the Senate and is expected to pass the House by July 4, potentially impacting stock market performance.
• Research suggests that the market’s positive reaction may be tied to anticipated pro-business measures, although the long-term effects could be mixed due to concerns about the deficit.

Market Overview

As of early Wednesday, July 2, 2025, stock futures for the Dow, S&P 500, and Nasdaq are showing gains, aligning with news of Trump’s tax bill progressing. This bill, which includes significant tax cuts and business incentives, seems to be driving optimism among investors, though the full impact remains uncertain.

Bill Details

The tax bill extends provisions from the 2017 Tax Cuts and Jobs Act, raises the state and local tax (SALT) deduction cap, and includes measures like 100% bonus depreciation for equipment. It’s estimated to add $2.3 trillion to the deficit over a decade, which could influence future market conditions.

Market Reaction

Current data indicates futures are up, with the Dow at 44,876 (+69 points), S&P 500 at 6,258.25 (+9.5 points), and Nasdaq at 22,729 (+36.25 points) as of 3:48 AM EDT. This suggests a positive short-term market response, though long-term effects may vary due to potential higher interest rates from increased deficits.

Survey Note: Detailed Analysis of Stock Market Trends and Trump’s Tax Bill Impact

This note provides a comprehensive overview of the stock market’s reaction to President Trump’s tax bill, known as “One Big Beautiful Bill,” as it heads to the House following its Senate passage. The analysis is based on recent market data and news reports available as of 12:56 AM PDT on Wednesday, July 2, 2025, and aims to offer a detailed understanding for investors and observers.

Current Market Data

Recent market updates indicate a positive movement in stock futures, likely influenced by the progress of the tax bill. As of 3:48 AM EDT on July 2, 2025, the following futures values were observed:

These figures, sourced from pre-market trading data, suggest a rise in futures, aligning with the user’s statement. The fair value futures also show positive implied opens, with the Dow implied open at +82.06, S&P 500 at +9.24, and Nasdaq at +36.86, indicating market optimism.

Details of Trump’s Tax Bill

The tax bill, titled “One Big Beautiful Bill,” passed the Senate with Vice President JD Vance casting the tie-breaking vote and is now headed to the House, with Speaker Mike Johnson aiming for passage by Thursday, July 4. The bill’s key provisions include:

• Extensions of the Tax Cuts and Jobs Act (TCJA) provisions set to expire by the end of 2025, such as individual tax rates, increased standard deductions, estate and gift tax exemptions, and child tax credits.
• Raising the SALT deduction cap from $10,000 to $40,000 per household, applicable to an income of $500,000.
• Pro-growth business measures, including 100% bonus depreciation for equipment, immediate deduction of domestic research and development (R&D) expenses, and looser business interest expensing through 2029.
• Estimated to deliver $3.7 trillion in tax cuts, offset by $1.2 trillion in spending cuts and revenue raisers, resulting in a net deficit impact of $2.3 trillion over a decade, potentially rising to $3 trillion with interest expenses.
• Revenue raisers include a progressive tax on net investment income for university endowments and private foundations, and a 3.5% excise tax on foreign remittance transfers.
• Spending cuts target climate initiatives and health programs, such as phasing out IRA clean energy tax credits and altering Medicaid and Affordable Care Act (ACA) provisions.
• Though trade negotiations remain uncertain, potential tariff revenues may partially offset the deficit.

These details, sourced from financial analyses like Morgan Stanley’s insights, highlight the bill’s significant fiscal implications, which could influence market dynamics.

Impact on the Stock Market

The stock market’s reaction appears to be a short-term positive response to the bill’s progress, driven by anticipated pro-business measures. However, the long-term impact is more complex, as outlined below:

• Short-Term Reaction: Current futures data shows gains, likely reflecting investor optimism about the bill’s passage and its potential to boost corporate earnings through tax cuts and business incentives. For instance, sectors like industrials, communication services, and energy are expected to benefit, according to Morgan Stanley’s Domestic Tax Policy Beneficiaries Index, which outperformed the Russell 2000 by 7% over the past year.
• Long-Term Considerations: Research suggests the stock market’s performance is more tied to the business cycle than tax changes, with the S&P 500 showing a weak correlation with tax policy shifts. Gains are likely marginal, and elevated deficits could lead to higher-for-longer interest rates, increasing borrowing costs, and potentially weighing on stock and bond valuations due to increased U.S. Treasury supply and higher term premiums.
• Sector-Specific Impacts: Clean energy stocks have outperformed the broader market this year, possibly due to the gradual phase-out (rather than repeal) of IRA clean energy tax credits. This suggests some sectors may see benefits despite overall fiscal concerns.

News reports, such as those from CNBC and Yahoo Finance, indicate mixed reactions on July 1, with the Dow rising while the Nasdaq and S&P 500 showed varied performance, reflecting sector-specific responses to the bill’s passage in the Senate.

Market Context and Broader Implications

The market’s current rise in futures aligns with the anticipation of the bill’s passage, which is seen as beneficial for businesses due to tax relief and investment incentives. However, concerns about the $2.3 trillion deficit impact over a decade, as noted by financial institutions, could lead to higher interest rates, potentially affecting stock valuations. This duality is evident in recent analyses, with banks like those cited in CNBC articles viewing the bill positively for the economy, while fiscal sustainability remains a concern.

In summary, the evidence indicates a positive short-term market reaction to Trump’s tax bill heading to the House, with futures rising as of early July 2, 2025. However, the long-term impact remains uncertain, with potential benefits for specific sectors tempered by deficit-related risks. Investors are advised to monitor further developments, especially the House vote expected by July 4, for updated market trends.