Cool Jobs Report Gifts the Dow a Record as Semiconductors Bear the Brunt of the Rotation

Key Market Levels — Close Jul 2, 2026

• S&P 500: 7,483.24 (0.00%)
• Dow Jones: 52,900.07 (▲ 1.14%)
• Nasdaq: 25,832.67 (▼ 0.80%)
• STOXX 50: 6,367.05 (▲ 1.35%)
• FTSE 100: 10,652.87 (▲ 1.67%)
• Nikkei 225: 68,733.15 (▼ 2.47%)
• Gold: $4,171.28 (▲ 1.18%)
• Brent Oil: $72.37 (▲ 0.80%)
• WTI Oil: $69.16 (▲ 0.68%)
• EUR/USD: 1.1452 (▲ 0.17%)

US Market Update

The first half of the year closed with the market's new rhythm on full display. A cooler-than-expected jobs report gave investors just what they wanted from a Federal Reserve that has been threatening to tighten, and the Dow responded by charging to a fresh record. By Thursday's close the Dow Jones Industrial Average had surged 594.83 points to a record 52,900.07, while the S&P 500 finished all but flat at 7,483.24 and the Nasdaq Composite slipped 0.80% to 25,832.67, weighed down by a second straight day of heavy selling in semiconductors. With U.S. markets shut on Friday for the Independence Day holiday, the Dow sealed a fourth consecutive weekly gain, its longest such run since late 2024.

The catalyst was a June payrolls report that came in cold. The economy added just 57,000 jobs, roughly half of what economists had expected, and prior months were revised lower, breaking a run of surprisingly hot readings. Rather than alarm the market, the softness came as a relief, easing the fear that the Fed would feel compelled to raise rates as soon as September and taking pressure off rate-sensitive corners of the market. The unemployment rate slipped to 4.2%, though that owed more to workers leaving the labour force than to fresh hiring, a nuance that tempered the enthusiasm without spoiling it.

Beneath the record, the rotation that has defined the past two weeks pressed on. Semiconductors bore the brunt of the selling for a second session, with the group's benchmark ETF dropping around 4.5% as investors took profits on a trade that had roughly doubled over the quarter. Micron slid, Nvidia eased, and the memory names that soared in June gave back a chunk of their gains, while Tesla fell despite reporting record quarterly deliveries. Money kept flowing out of the crowded growth trade and into industrials, financials, and healthcare, the story of a market broadening out rather than breaking down.

Corporate Earnings

A lighter calendar in a holiday-shortened week, spanning defence drones, athletic wear, beverages, packaged food, financial data, and industrial distribution. Six names stood out.

• AeroVironment (AVAV) — Beat estimates. Revenue of $642M sailed past the $559M estimate; EPS of $1.84 beat the $1.47 estimate. Defence spending and drone demand driving growth.
• NIKE (NKE) — Beat estimates. Revenue of $10,972M edged past the $10,849M estimate; EPS of $0.20 beat the $0.13 estimate. An encouraging read on the ongoing turnaround.
• Constellation Brands (STZ) — Beat estimates. Revenue of $2,433M in line to slightly ahead; EPS of $3.43 beat the $3.20 estimate on cost discipline and a resilient beer portfolio.
• General Mills (GIS) — Beat estimates. Revenue of $4,610M beat the $4,602M estimate; EPS of $0.95 beat the $0.80 estimate. Steady pricing across cereal and snacking brands.
• FactSet Research (FDS) — Beat estimates. Revenue of $623M beat the $618M estimate; EPS of $4.53 beat the $4.45 estimate. Steady subscription growth among institutional clients.
• MSC Industrial Direct (MSM) — Beat estimates. Revenue of $1,047M topped the $1,033M estimate; EPS of $1.43 beat the $1.27 estimate. A solid read on manufacturing and maintenance demand.

Economic Indicators

A dense week of labour market data, and the message that emerged was of an economy cooling gently rather than cracking.

• Labour Market — The June employment report was the headline. Nonfarm payrolls rose by only 57,000, below forecasts, while downward revisions to prior months trimmed the recent run of strength. The unemployment rate slipped to 4.2%, though the decline was partly explained by a lower participation rate, meaning the report was not as cleanly positive as the headline figure suggested. Weekly jobless claims eased to 215,000, keeping the overall message one of cooling rather than outright weakness.
• Manufacturing — The factory sector remained in expansion but lost pace. The ISM Manufacturing PMI fell to 53.3 in June from 54.0 in May and came in below expectations, with output and new orders still growing but losing some momentum. Survey panellists continued to flag tariff uncertainty and elevated input costs as constraints on hiring and expansion.
• Business Activity — ADP reported 98,000 private sector jobs in June, below forecasts and below May's revised figure. Consumer confidence remained subdued despite a modest improvement. Together, the data pointed to an economy still expanding but no longer giving the Fed a clean argument for a near-term rate hike.
• Mortgage Rates — Freddie Mac's 30-year fixed mortgage rate stood at 6.43% as of July 2, easing slightly by the end of the week as Treasury yields moved lower following the softer jobs report. Affordability pressure nonetheless remained firmly in place, and housing activity stayed constrained.

Bonds and Monetary Policy

Treasuries were volatile through the week. Yields backed up midweek as mixed data, including still-expanding manufacturing activity, lifted the 10-year toward 4.44%, only to reverse on Thursday when the soft jobs report sent them lower, with the policy-sensitive 2-year note easing toward 4.13%. The net effect by Thursday was a lower close on yields and a small tailwind for rate-sensitive assets, even as the longer-term inflation picture stayed warm.

The Fed's target range remains 3.50%–3.75%. Chair Warsh had described the jobs market as steady in remarks midweek while reiterating his focus on inflation, but the cool payrolls print eased the market's fear of an imminent hike, pushing the odds of a September move lower. The dollar softened in response, giving back some of its recent gains as U.S. yields fell in line with the data.

Policy and Sentiment

• The Jobs Report and the Fed — The soft payrolls print reframed the policy conversation. By easing the fear of a near-term rate hike, it took pressure off a Fed that has spent recent weeks stressing its resolve on inflation, and markets trimmed the odds of a September move, a shift that quietly underpinned the rotation into economically sensitive stocks.
• The AI Revaluation — The technology sell-down had a fundamental undercurrent. A report that Meta planned to enter the cloud market and sell access to AI computing power rattled the AI infrastructure names, sending CoreWeave and Nebius sharply lower and feeding a broader repricing of a trade that had run far ahead of itself.
• Iran and Oil — The geopolitical backdrop stayed quiet enough to reassure. Talks between the United States and Iran passed through another rough patch without derailing the peace, and oil held close to its post-conflict lows, keeping a helpful lid on the inflation outlook even as prices ticked higher on the day.

International Markets

Asia — Nikkei 225: 68,733.15 (▼ 2.47%). Asia was the week's soft spot. Japan's Nikkei 225 fell 2.47% to 68,733.15 and South Korea's Kospi tumbled close to 8% as the semiconductor selling that gripped Wall Street rippled through the region's chip-heavy markets, unwinding a stretch of speculative gains in memory and AI names.

Europe — STOXX 50: 6,367.05 (▲ 1.35%). European equities pushed the other way. The FTSE 100 rose 1.67% to 10,652.87 and the Euro STOXX 50 added 1.35% to 6,367.05, buoyed by strength in financials, energy, and industrials and by the softer dollar that followed the U.S. jobs data.

Commodities. Commodities firmed. Gold rebounded to $4,171.28, up more than 1%, as the weak payrolls print pulled Treasury yields and the dollar lower and revived demand for the metal. Oil edged up as well, with Brent near $72.37 and WTI around $69.16, both holding close to their post-conflict lows as U.S. and Iranian tensions stayed contained.

Commodities and Currencies

• Gold (Spot): $4,171.28 (▲ 1.18% daily)
• Brent Crude Oil: $72.37 (▲ 0.80% daily)
• WTI Crude Oil: $69.16 (▲ 0.68% daily)
• EUR/USD: 1.1452 (▲ 0.17% daily)
• GBP/USD: 1.3367 (▲ 0.15% daily)

Volatility and Week Ahead

CBOE Volatility Index (VIX): 16.15 — down 2.65%; calm since the Iran peace has generally held (long-run average ~20).

With the holiday behind them, investors turn to the FOMC minutes from the June 16-17 meeting, due Wednesday, for a fuller sense of how divided policymakers really are on the inflation and rate path. ISM Non-Manufacturing on Monday will give the first June read on the services economy. The data calendar is otherwise light, with trade data on Tuesday and Canada's employment report on Friday. The central questions carry over from June: whether the rotation from technology into value has legs, whether the cooling labour market nudges the Fed away from a hike, and whether the AI trade can find its footing after a bruising fortnight.

Key releases:

• Mon 6 Jul — U.S.: ISM Non-Manufacturing Composite (Jun.); Canada: BoC Business Outlook Survey (Q2); Eurozone: Retail Sales (May)
• Tue 7 Jul — U.S.: Trade Balance (May); Canada: Merchandise Trade Balance (May); Japan: Leading Indicators (May); Current Account (May); Trade Balance (May)
• Wed 8 Jul — U.S.: Wholesale Inventories (May); FOMC Minutes (Jun. 16-17 meeting); Consumer Credit (May)
• Thu 9 Jul — U.S.: Existing Home Sales (Jun.); Japan: Machine Tool Orders (Jun.)
• Fri 10 Jul — Canada: Employment Report (Jun.); Building Permits (May)

For informational purposes only. Not investment advice. Data as of Jul 3, 2026. Consult primary sources before making investment decisions.

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