The Dow Jones Industrial Average reached a new all-time high on Thursday, propelled by a weaker-than-expected June jobs report that tempered expectations for further Federal Reserve interest rate hikes. The blue-chip index rose 560 points, or 1.10%, to close at 52,865.24 after touching an intraday record of 52,805.12. This marked the Dow's fourth consecutive weekly gain, its longest winning streak since October 2024.
In contrast, the broader market showed mixed performance. The S&P 500 slipped 0.06% to 7,478.66, while the Nasdaq Composite fell 0.87% to 25,813.75, dragged down by continued weakness in semiconductor shares. U.S. markets will be closed Friday for the Independence Day holiday.
Weak Jobs Data Eases Rate Hike Pressure
The June nonfarm payrolls report showed the U.S. economy added just 57,000 jobs, significantly below the 110,000 expected by economists polled by Reuters and the 115,000 forecast by Dow Jones. The unemployment rate came in at 4.2%, slightly lower than the anticipated 4.3%. Following the release, the yield on the two-year U.S. Treasury note declined as investors increased bets that the Fed could delay further rate increases. According to CME FedWatch data, the probability of a September rate hike fell to 55% from 64.1%.
“As we are learning how the Fed reaction function will form under [Fed Chairman Kevin] Warsh, this print takes some of the pressure off of the inflation fighting institution to hike near term,” said Bradford Smith, portfolio manager at Janus Henderson Investors, in a CNBC report. “That said, Warsh commented at his first presser that jobs data only becomes meaningful after the third revision and by then becomes ‘echoes of history.’ With oil price inflation moderating, some softness on the jobs front likely keeps the Fed on hold at least for the next meeting.”
Semiconductor Selloff Weighs on Technology
Technology stocks remained under pressure as investors continued to rotate out of semiconductor shares following their strong gains earlier this year. The VanEck Semiconductor ETF fell 5.2%, led by declines of 13% in Teradyne and KLA. Nvidia lost 2.1%, while Micron Technology dropped 6%. Tesla also declined despite reporting second-quarter deliveries that exceeded analyst expectations, as noted in our coverage of Tesla Stock Drops 3% Despite Record Deliveries: Profit-Taking and AI Focus Weigh.
Bending Spoons fell a day after the Vimeo owner surged 40% during its Nasdaq debut.
Weekly Gains Remain Intact Despite Rotation
Despite Thursday's mixed performance, the major U.S. indexes were on track for solid gains during the holiday-shortened week. The S&P 500 advanced more than 1.8%, while the Dow and Nasdaq gained over 1.7% and 2.4%, respectively. Investors also monitored geopolitical developments after oil prices declined following comments from mediator Qatar indicating progress in talks between Iran and the United States aimed at ending the Middle East conflict, easing one source of inflation concern. For more on currency and commodity moves, see Dollar Holds Firm Near 101 as Hawkish Fed Bets Rise; Yen Tests 162, Oil Eases.
The rotation out of high-flying tech names into value and cyclical sectors reflects a market recalibrating its expectations for monetary policy. While the weak jobs data provided a boost to rate-sensitive stocks, the ongoing chip selloff highlights lingering concerns about valuations and sector-specific headwinds.
This article is for informational purposes only and does not constitute financial advice.
