U.S. Stocks Set To Close Out Blockbuster Quarter

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Luke Vargas (0:09)

A federal judge rules that the Trump administration unlawfully froze Hudson River tunnel funding. Plus, how Ukrainian drones are making Russians feel the hardships of war.

And as inflation shows signs of pulling back across Europe, we'll look at why the continent needs all the help it can get.

Chelsea Delaney (0:28)

The fact that Europeans are so anxious about spending, the fact that they're saving more, that is really holding back the European economy.

Luke Vargas (0:37)

It's Tuesday, June 30th. I'm Luke Vargas for the Wall Street Journal, and here is the AM Edition of What's News. The top headlines and business stories moving your world today.

In a break for East Coast commuters, a federal judge has permanently blocked the Trump administration from withholding funds for a new rail tunnel connecting New York and New Jersey under the Hudson River. Both states had sued after the administration said it wouldn't distribute funding for the project as it reviewed whether it included DEI policies. In her ruling, however, Judge Jeanette Vargas cited public comments from Trump, suggesting that the funding freeze was his personal decision and was politically motivated. The White House referred requests for comment to the Transportation Department, where spokesmen said it remained committed to making sure taxpayer dollars were spent responsibly. Amtrak's current pair of tunnels connecting Manhattan to New Jersey are over a century old and sustained major damage during 2012's Superstorm Sandy, spurring calls for their replacement.

US stocks are set to close out a blockbuster quarter with fresh momentum. Futures are rising this morning, putting major indexes on pace for their best quarterly gains in years. The S&P 500 is up 14% through yesterday and the NASDAQ up 20%, the biggest quarterly rallies for both since 2020 That's despite remarkable volatility that saw tech stocks sell off as recently as last week. Their investors have returned, however, with tech shares doing much of the heavy lifting again pre-market. The Japanese yen has hit a 40-year low, driven down by a strong US dollar and high interest rates from the Federal Reserve as Tokyo Bureau Chief Jason Douglas explains.

Jason Douglas (2:28)

There are a bunch of factors driving it, and then some of it is still slightly unexplainable. There's a big gap between rates in Japan and rates in the US, for instance, and that's the kind of thing that tends to weaken a currency. I think there's some anxiety around the fiscal plans of the government of Prime Minister Takaichi here in Japan.

She is planning on doing some big spending. She announced new plans for a $2 trillion or thereabouts investment package only yesterday. Then there are a few other slightly more idiosyncratic things. There's this AI boom going on, and that is weakening of the currencies of big Asian exporters somewhat paradoxically because they're benefiting on the export side, selling all this equipment to the US to build data centers and that kind of thing. But then retail investors in these countries are in fact piling into US stocks. So we see these big outflows from places like Korea and to some extent in Japan as well, and that is adding to diamond pressure on the currency. In Japan's case, the stock market here is up something like 40 percent, but a lot of that is institutional money from overseas, and because they're more sophisticated, they tend to hedge their exposure to the currency, which tends to push a dime not up. Then all this, of course, more recently we've had the Iran war and the crisis in the Strait of Hormuz. Japan is a big energy importer, and so when you price energy in dollars, currencies of countries that have to import a lot do tend to weaken.

Luke Vargas (3:45)

With the yen trading just below Japan's preferred 160 level at 162 to the dollar, traders are on high alert for whether authorities may intervene to defend the yen in a bid to avert a currency-induced rise in consumer prices.

While inflation is also a concern in Europe, as new data this morning from Spain, France, Italy and Germany show that consumer prices are coming off recent highs but broadly remain more elevated than policymakers would like. As a result, economics reporter Chelsea Delaney says that Europeans have doubled down on saving, a move that's hurting growth.

Chelsea Delaney (4:22)

So the US has grown twice as fast as the eurozone in the UK in the past couple of years. Consumers are what drive economies with their willingness to spend on food and clothes and vacations and going out to restaurants and the fact that in Europe, consumers are so frugal and so anxious, it is one of the main reasons why the economy has been growing so slowly, especially in comparison to the United States.