Nasdaq Surges 1.52% to 26,213.72 as Chip Stocks Power Best Quarter Since 2020

Mumbai, July 1: The Nasdaq Composite surged 1.52% to close at  26,213.72, while the S&P 500 and Dow Jones Industrial Average also posted solid gains on Tuesday, capping off a blockbuster second quarter that saw major indices deliver their strongest quarterly performance since 2020.  

Technology and semiconductor stocks led the charge, with chipmakers delivering unprecedented gains as artificial intelligence infrastructure spending continues to fuel investor optimism despite geopolitical uncertainties and hawkish Federal Reserve signals. 

Wall Street Closes Strong on Final Trading Day of Record-Breaking Quarter 

The Dow Jones Industrial Average climbed 136.46 points, or 0.26%, to close at a record 52,319.20, marking the blue-chip benchmark’s first-ever finish above the 52,000 level. The S&P 500 rose 0.79% to end at 7,499.36, while the Nasdaq Composite led the charge with a 1.52% gain to 26,213.72, extending the tech-heavy index’s impressive run. 

The trading session, which marked the final day of both the second quarter and the first half of 2026, was characterised by broad-based strength across technology and semiconductor stocks.  

The Philadelphia Semiconductor Index (SOX) posted its best quarter on record, while the iShares Semiconductor ETF (SOXX) gained more than 3% on Tuesday alone, bringing its year-to-date advance to 82%. 

Chip Stocks Fuel Nasdaq Rally with Record Quarterly Gains 

Semiconductor stocks were the undisputed stars of Tuesday’s session, with the sector delivering eye-popping returns. KLA Corporation surged 8.48% to hit an all-time high of $304.48, pushing its market capitalisation to approximately $347 billion. Advanced Micro Devices jumped 7.68%, while Intel advanced 5.98%, and Nvidia gained 2.45%, reflecting continued investor appetite for companies at the forefront of AI infrastructure. 

The VanEck Semiconductor ETF (SMH) climbed more than 3%, positioning the fund for a staggering 82% year-to-date gain. Memory chip makers were particularly strong performers, with Sandisk (SNDK) soaring 10.68% and Micron Technology gaining 0.52%, having already surged approximately 240% in the second quarter alone. 

Lam Research rose 5.46%, Applied Materials climbed 4.08%, and Texas Instruments advanced 4.41%, underscoring the breadth of the semiconductor rally. The sector’s extraordinary performance has been driven by the artificial intelligence infrastructure build-out, with technology giants collectively planning to spend more than $700 billion on AI-related capital expenditures this year. 

Also Read: How to invest in US stocks  

S&P 500 and Nasdaq Post Best Quarterly Gains Since Pandemic Era 

The second quarter of 2026 will go down in history as one of the most remarkable periods for US equities. The S&P 500 surged 14.9% during the three-month period, marking its best quarterly performance since the second quarter of 2020, when it gained 19.95% amid the post-pandemic recovery. The index has now recorded four positive quarters in its last five, reflecting sustained investor confidence in the US economy. 

The Nasdaq Composite delivered even more spectacular returns, climbing 21.4% in the second quarter—its largest quarterly gain since the second quarter of 2020’s 30.63% advance. The tech-heavy index has now posted four positive quarters in its last five, highlighting the continued dominance of technology and AI-related stocks. 

The Dow Jones Industrial Average gained 12.9% during the quarter, representing its strongest quarterly performance since the fourth quarter of 2022. The blue-chip index’s first-half gain of 8.9% marks its best first-half performance since 2021, when it jumped 12.7%. 

AI Infrastructure Build-Out and Memory Shortage Drive Record Semiconductor Surge 

The semiconductor sector’s unprecedented rally has been fuelled by two primary factors: the artificial intelligence infrastructure build-out and a severe memory and storage chip shortage that has driven prices sharply higher. The memory crunch, as analysts have dubbed it, has been particularly beneficial for companies like Micron and Western Digital, which have seen their products command premium pricing amid supply constraints. 

Bank of America analysts noted that technology giants’ free cash flow as a share of earnings has collapsed to near 0% due to the massive AI data centre buildout. Hyperscalers including Alphabet, Microsoft, Amazon, Meta, and Oracle are expected to spend well over $700 billion on AI infrastructure in 2026, tying their hands in a race where cutting capital expenditure would mean dropping out of the AI competition. 

However, the same analysts warned that the record-setting rally faces potential headwinds. Bank of America left its year-end S&P 500 target unchanged at 7,100, implying approximately 5% downside from current levels, noting that many of the tailwinds that have propelled markets—strong earnings, ample free cash flows, and high liquidity—”are reversing.” 

Magnificent Seven Performance Diverges as Alphabet Joins Dow Jones 

The so-called ”Magnificent Seven” mega-cap technology stocks delivered mixed performances on Tuesday, with broader market leadership shifting away from the group that dominated markets in previous years. Alphabet rose 1.05% on its first day as a Dow Jones Industrial Average component, adding to Monday’s 4% surge that helped the blue-chip index close above 52,000 for the first time. 

Tesla gained 2.07% following the closure of a federal safety probe and the release of its Full Self-Driving software version 14. Apple advanced 2.61%, while Microsoft gained 1.13%. Amazon declined 0.75%, and Netflix fell 3.14%, reflecting the increasingly selective nature of investor enthusiasm. 

Apple shares remained little changed after reports of a serious security breach at partner Tata Electronics in India, where photos of parts for the upcoming iPhone 18 Pro were leaked to the dark web. The hack has exposed supplier details that Apple typically does not share, posing reputational risks for the tech giant ahead of its September product launch. 

First-Half Winners: Chip Stocks Outperform as Investors Pivot from Megacap Tech 

Investor preference shifted in 2026 from the “Magnificent Seven” to companies supplying AI components. While the Technology Select Sector SPDR Fund (XLK) gained about 28% year-to-date, chipmakers and storage firms delivered stronger returns.  

Intel surged more than 200%, Advanced Micro Devices (AMD) climbed around 172%, Lam Research rose roughly 150%, while Western Digital and Seagate Technology also more than doubled. The rotation reflects growing concerns over how quickly big technology companies will earn returns from their massive AI infrastructure spending.  

Orion CIO Tim Holland said investors are increasingly favouring value stocks over expensive growth stocks as higher interest rates remain a headwind for growth. 

Also Read: US Stock market timings  

Fed Rate Hike Concerns Linger as Labour Market Shows Resilience 

Federal Reserve policy remained a key focus after Cleveland Fed President Beth Hammack said further rate hikes may be needed if inflation remains elevated. Markets are pricing in at least one rate hike before the end of 2026, with nine of 19 Fed policymakers expecting another increase. Meanwhile, the labour market stayed resilient as JOLTS job openings rose to 7.59 million in May, beating forecasts of 7.3 million. 

US-Iran Peace Talks and Oil Price Slump Ease Market Anxiety 

Markets also benefited from reports that the US and Iran agreed to resume peace talks in Doha, easing fears of supply disruptions. Brent crude fell below $74 per barrel and WTI slipped below $70. Record US oil production of 13.93 million barrels per day further eased supply concerns, improving investor sentiment despite growing expectations of a future oil surplus. 

Dollar Strengthens to 40-Year High Against Yen as Currency Pressures Mount 

The US dollar climbed to 162.42 yen, its strongest level against the Japanese currency since 1986, supported by expectations of further Federal Reserve rate hikes. Japan’s Finance Minister Satsuki Katayama said authorities remain ready to act if needed, keeping intervention expectations alive. Meanwhile, HSBC warned the dollar’s rally could accelerate if the Fed signals additional policy tightening. The US Dollar Index held steady at 101.10. 

Company Updates: Earnings, Acquisitions, and Analyst Moves Shape Trading Session 

Several individual company stories captured investor attention during Tuesday’s session. AeroVironment shares soared 19% after the drone maker posted better-than-expected fiscal fourth-quarter results, earning an adjusted $1.84 per share on $641.6 million in revenue, well above analyst forecasts for $1.48 per share and $559.4 million. 

Air Products jumped more than 9% despite announcing that it will incur a pre-tax charge of up to $2.9 billion for exiting the Louisiana Clean Energy Complex project. The company also said it will discontinue a zero-carbon liquid hydrogen facility in Arizona and other clean energy projects, citing challenging commercial conditions. 

Zimmer Biomet Holdings sank more than 7% after announcing it would acquire the Iovera business from Pacira BioSciences for up to $140 million. Logitech fell approximately 5% after Bank of America downgraded the stock to underperform from neutral, lowering its price target to $86 from $108 and citing risks from price hikes across PCs, tablets, and gaming systems. 

Tesla shares rose 2% after Deutsche Bank said the company’s second-quarter deliveries are expected to exceed estimates by about 10,000 units, driven mostly by European sales. That would represent volume growth of 16% quarter-over-quarter and 8% year-over-year. 

The second quarter’s record gains underscored the dominance of AI and semiconductor stocks, with chipmakers leading the market rally. A resilient labour market and lower oil prices supported sentiment, while investors continued to monitor Federal Reserve policy, Middle East developments, Treasury yields, and the US dollar’s strength against the yen. 

Source 

• https://www.nasdaq.com/ 

• spglobal.com/spdji/en/indices/equity/sp-500/ 

• https://www.dowjones.com/