U.S. equity markets closed mixed on Thursday after a weaker-than-expected June employment report shifted monetary policy expectations, leading to a notable sector rotation. The Dow Jones Industrial Average gained 1.14% to settle at 52,900.07, setting a new record high for the fourth consecutive week. In contrast, the Nasdaq Composite fell 0.80% to 25,832.67, and the S&P 500 was flat at 7,483.24. This divergence was largely due to financials, healthcare, consumer staples, energy, and industrials anchoring the value advance, while high-valuation technology and communication services acted as primary drags.
The softer labor market data indicated that nonfarm payrolls increased by a mere 57,000 jobs, significantly missing Wall Street's estimates of 110,000 to 115,000. Additionally, prior months' data for April and May were revised lower. Although the unemployment rate decreased to 4.2%, matching expectations, the overall weak jobs report effectively eased near-term interest rate anxieties. This unexpected deceleration in June nonfarm payrolls caused fixed-income markets to recalibrate the Federal Reserve's long-term policy path, suggesting a more moderate phase for domestic corporate hiring. The data also supported long-duration bonds and dividend-paying cyclicals, helping to offset valuation compression in higher-beta growth equities.
The technology sector, particularly semiconductors, faced significant pressure. The Philadelphia Semiconductor Index declined 5.44%, while the iShares Semiconductor ETF (SOXX) fell over 5%. This downturn was partly attributed to Meta Platforms' announcement regarding its plans to sell computing power, which raised questions about near-term capacity. Major chipmakers like SanDisk (SNDK) plummeted over 14%, KLA Corp (KLAC) fell over 12%, and Marvell Technology (MRVL) dropped more than 11%. Apple (AAPL) also contributed to the sector's woes despite rising on the week, as reports indicated it was negotiating to buy memory chips from Chinese suppliers, disrupting the pricing power of standard memory makers. Investors were also taking profits in chip stocks after their strong gains earlier in the year.
Electric vehicle (EV) stocks displayed mixed performance following delivery data. Tesla (TSLA) shares fell 7.5% due to profit-taking, despite the company reporting record second-quarter deliveries of approximately 480,000 vehicles, surpassing consensus estimates. The shares had risen sharply earlier in the week in anticipation of the report. Conversely, Rivian (RIVN) advanced over 10% after its second-quarter production and deliveries exceeded corporate guidance, leading the company to raise its full-year 2026 delivery target to a range of 65,000 to 70,000 vehicles.
Energy markets also saw developments, with WTI crude oil falling to a 4.25-month low. This was driven by increased global supplies, as the United Arab Emirates ramped up crude oil and condensate shipments by 30% in June to over 3.9 million barrels per day, restoring pre-war export levels. A U.S. official also reported a surge in commercial shipping through the Strait of Hormuz, with American military support boosting oil flows to over 10 million barrels per day. This contributed to easing oil prices, which alleviated some inflation concerns stemming from geopolitical developments.
