Weekly Wrap Up: Dow Hits Record High as Soft Jobs Data Cools Rate Fears, Nasdaq Sinks on AI Chip Sell-Off

Authored By HDFC SKY | Published at: Jul 5, 2026 03:17 PM IST

Open Free Demat Account

Mumbai, July 5: US stock markets delivered a mixed performance during the holiday-shortened trading week ended July 3, as investors grappled with a sharp rotation away from technology stocks into more defensive sectors.

The Dow Jones Industrial Average surged to an all-time closing high of 52,900.07, propelled by a weaker-than-expected June jobs report that significantly reduced expectations of further interest rate hikes by the Federal Reserve.

However, the tech-heavy Nasdaq Composite suffered back-to-back losses, dragged down by a relentless sell-off in semiconductor and artificial intelligence stocks. For the week, the Dow rose approximately 2%, the S&P 500 gained 1.8%, and the Nasdaq advanced 2.1%, despite Thursday’s decline. Markets remained closed on Friday, July 3, in observance of the Independence Day holiday.

Dow Closes Above 52,000 for First Time as Tech Stocks Rebound from Weekly Losses

Monday, June 29, marked a strong start to the holiday-shortened week as the Dow Jones Industrial Average closed above 52,000 for the first time in history. The blue-chip index rose 306.63 points, or 0.6%, to settle at 52,182.74.

The tech-heavy Nasdaq Composite surged 2%, while the S&P 500 advanced 1.2%, breaking a five-day losing streak. The rally was driven by several catalysts. Alphabet, which officially joined the Dow Jones Industrial Average on Monday, rose more than 4%.

Also Read: How to Invest in the US Stocks From India?

A landmark Supreme Court decision held that Federal Reserve Governor Lisa Cook would remain in her job for now, rejecting the Trump administration’s attempts to fire her while carving out an exception for Fed independence.

Easing US-Iran tensions also lifted markets after both sides reportedly agreed to stop tit-for-tat attacks, with President Trump announcing that the two nations would meet in Doha, Qatar, for renewed talks. Oil prices moved higher but pared gains as investors assessed the risk of further supply disruptions.

Tech Volatility Resurfaces as AI Valuation Concerns and Fed Hawkishness Weigh

Tuesday, June 30, saw a reversal of the previous day’s gains as technology stocks came under renewed pressure. The Nasdaq Composite dropped 1.09% to 29,118.24, while the S&P 500 fell 0.05% to 7,354.02.

The Dow Jones Industrial Average slipped 0.09% to 51,876.11. Technology stocks came under pressure due to renewed questions around AI spending, interest rates, and valuation. Minneapolis Federal Reserve President Neel Kashkari added to concerns after signaling that one rate hike could still come in 2026, pointing to sticky inflation tied to energy prices and AI infrastructure spending. Meanwhile, OpenAI launched GPT-5.6, a new AI model suite with stronger coding, cybersecurity, and biology features, but the release came under limited preview and close US government oversight, keeping AI regulation and commercialization risk in focus.

The pressure spread across large technology names as the S&P 500 and Nasdaq snapped two-week winning streaks. Healthcare stocks moved in the opposite direction, with Eli Lilly, Johnson & Johnson, and AbbVie all hitting record highs as investors looked for more defensive growth. The 10-year US Treasury yield stood at 4.38%, while oil fell 3.75% to $70.07 after traffic through the Strait of Hormuz resumed.

Dow Extends Record Run as Tech Rally Caps Positive Week

Wednesday, July 1, saw the Dow Jones Industrial Average continue its record-breaking run, closing at 52,182.74. The S&P 500 rose 1.18%, while the Nasdaq Composite surged 2.07%. The rally was catalysed by the US-Iran ceasefire pause and Alphabet’s addition to the Dow, alongside a broad recovery in AI stocks.

The tech-heavy Nasdaq Composite was the standout performer of the session, soaring 496.28 points to close at 26,517.93, a gain of 1.91%. The S&P 500 capped a remarkable recovery from the index’s 2022 lows and extended the bull market that began in October of that year.

Dow Hits Record High at 52,900 as Weak Jobs Data Cools Rate Fears, Nasdaq Sinks on Chip Rout

Thursday, July 2, delivered the most significant market move of the week as the Dow Jones Industrial Average surged 594.83 points, or 1.14%, to a record closing high of 52,900.07. The S&P 500 remained virtually unchanged, inching up by just 0.01 points to 7,483.24, while the Nasdaq Composite dropped 207.36 points, or 0.80%, to close at 25,832.67.

The primary catalyst was the June non-farm payrolls report, which showed the US economy added only 57,000 jobs last month, far below economists’ estimates of 110,000. The unemployment rate was 4.2%, in line with expectations of 4.3%. The employment report followed a run of strong job gains recently. Expectations for a rate hike from the Federal Reserve decreased significantly after the report.

According to CME FedWatch, for the September meeting, hike expectations dimmed to 55% from 64.1%. “The jobs report doesn’t mean the fear of inflation is over,” said Adam Sarhan, chief executive at 50 Park Investments in New York. “It just takes the pressure off the Fed to raise rates in the short term”.

Investors have been worried about inflation especially given sharp gains in oil prices at the start of the Iran war. The yield on the 10-year Treasury immediately fell back to 4.46% after the release of the US hiring data.

Despite the broad-based rally in most stocks, the Nasdaq suffered a second consecutive day of losses as semiconductor and AI stocks extended their steep sell-off. The PHLX Semiconductor Index sank 6.3% on Wednesday and 5.4% on Thursday. Among chip giants, Nvidia fell 2.1%, AMD dropped 4.28%, Intel declined 5.24%, Applied Materials slid 7.31%, and ASML lost 3.95%.

Memory stocks also weakened: Western Digital fell 9.89%, Seagate dropped 10.30%, and Micron Technology erased an early gain to drop 5.45%. KLA plunged 11.51%, Lam Research dropped 10.22%, and Teradyne sank 13%. Despite this, the SMH ETF had earlier surged 71% in Q2, marking a sharp reversal in sentiment. Investors were likely taking profits in chip stocks following this year’s strong gains, with the semiconductor index remaining up about 78% for the year to date.

Apple Leads Dow Higher, Tesla Sinks Despite Strong Deliveries

Apple shares rose 4.8% and helped to support all three major indexes, with Nikkei Asia reporting that Apple plans to launch five new iPhone models. Apple’s market cap rose, contributing significantly to the Dow’s record close.

On the Dow, 26 of 30 components finished higher, with Apple leading gains followed by McDonald’s +4.06%, Walt Disney +3.86%, Amgen +3.55%, and Johnson & Johnson +3.35%. Visa added 2.95%, while JPMorgan slipped 0.03%. On the downside, Caterpillar fell 2.70% and UnitedHealth declined 0.53%.

Tesla shares dropped 7.5% to $393.45 even though the electric carmaker posted second-quarter deliveries above estimates. Tesla reported 480,126 vehicle deliveries, beating estimates of 406,600, with deliveries rising 25% year-on-year and 34% quarter-on-quarter. Tesla shares had risen sharply earlier in the week ahead of the report.

Cybersecurity Stocks Surge as AI Boom Drives Demand, Meta Jumps on Cloud Business Plans

Cybersecurity stocks solidified their status as big winners from the artificial intelligence boom this week. The group rallied after The Wall Street Journal reported over the weekend that Chinese AI models have become nearly as capable as the leading US platforms at identifying vulnerabilities in code.

Rather than viewing that as a negative for the sector, investors saw it as another reason that companies will need to spend more on cybersecurity. Club stocks Palo Alto Networks and CrowdStrike led the advance, with both reaching all-time highs during the week. By week’s end, Palo Alto had gained 14.5% and CrowdStrike had risen 10.7%.

Meta Platforms gave investors a reason to believe that its enormous AI spending could finally turn into meaningful revenue. Shares of the Facebook and Instagram parent jumped more than 8% on Wednesday after news that the company is preparing to launch a cloud infrastructure business that would sell excess AI computing power and AI models to outside customers. Meta has faced growing concerns about its massive capital spending on servers, data centers, and AI infrastructure.

Sector Rotation Accelerates as Healthcare and Defensives Outperform

The week was marked by a significant rotation out of technology stocks into more defensive sectors. Healthcare moved strongly in the opposite direction, with Eli Lilly, Johnson & Johnson, and AbbVie all hitting record highs. The move suggested investors were looking for more defensive growth as tech momentum cooled.

Eight of the 11 primary S&P 500 sectors ended in green on Thursday, with health and consumer staples leading the gainers by adding 2.70% and 2.41%, respectively. Defensive groups such as consumer staples (+1.7%) and utilities (+0.9%) provided a safe haven, while the Nasdaq Composite lost 4.18% for the preceding week. The bullish rotation theme remained in play as Mag-7 lost ground and the S&P493 gained.

Crypto Stocks and Consumer Names See Selective Gains

Stocks of companies in the crypto industry were also strong after the price of bitcoin rose roughly 2%, a day after dropping near its lowest level since 2024. Robinhood Markets rose 3.8% and Coinbase Global gained 3.9%.

The company behind LaCroix sparkling waters climbed 7.5% after National Beverage said it will pay a special dividend of $3.25 for each share that investors hold. Dollar Tree rose 2.4% after the retailer said it approved a program to send up to $2.5 billion to its shareholders by buying back its stock.

IPO Market Sees Strong Week Led by Bending Spoons

The IPO market remained highly active during the week, with three major IPOs, four SPAC pricings, and 11 IPO and four SPAC filings, reflecting continued momentum in new listings.

Bending Spoons (BSP) led the week’s offerings, pricing above its range at $29 per share to raise $1.7 billion at a $19.5 billion valuation. The Italy-based technology company has completed more than 50 acquisitions and owns platforms including AOL, Evernote, Vimeo, and WeTransfer. The stock debuted on Nasdaq on July 1 and finished the week 24% higher.

ITG (ITG), a broadband and utility infrastructure services provider, priced below its range and raised $312 million at an approximately $1.9 billion valuation. The company serves broadband providers, wireless carriers, data centres, and utilities across the US. Its shares ended the week down 3%.

Lime (LIME), the world’s largest shared micro-mobility platform, raised $174 million at an approximately $1.8 billion valuation after pricing at the midpoint of its range. Operating in 230 cities across 29 countries, the company serves around 19 million users. The stock closed the week unchanged.

Idaho Copper (COPR) also completed its NYSE American listing, raising $18 million at a $96 million valuation, with shares ending the week down 14%.

The SPAC market also remained active, with Ares Acquisition III ($345 million), Osprey Acquisition III ($261 million), Viking Acquisition II ($200 million), and Meridian3 Industrials Acquisition ($175 million) completing their offerings.

Rocket Lab Leads Busy Week for M&A Deals

M&A activity was equally strong, with several billion-dollar transactions announced across the technology, infrastructure, and healthcare sectors.

Rocket Lab (RKLB) announced the week’s largest deal, agreeing to acquire Iridium (IRDM) for $8 billion in a cash-and-stock transaction valued at $54 per share, representing a 24% premium. The acquisition gives Rocket Lab ownership of Iridium’s global satellite network, strengthening its end-to-end space capabilities. Rocket Lab shares rose nearly 16%, while Iridium gained more than 20% following the announcement.

Digital Realty agreed to acquire stakes in Blackstone-owned Virginia data centres for $3.5 billion, including interests in three facilities with a combined enterprise value of $7.8 billion. The company expects the transaction to support earnings growth in 2027 and 2028. The stock was last trading down 5.4% and is up 23% in the year-to-date.

QXO completed its acquisition of TopBuild, creating a leading North American building materials company with strong positions across insulation, roofing, waterproofing, and lumber. The company expects to generate at least $300 million in annual synergies by 2030. Following the merger announcement, QXO (NYSE: QXO) shares dropped by 3.03%, closing at $17.28, amid a massive surge in trading volume. The downturn reflected market concerns over the merger election results, specifically that 91% of TopBuild shareholders opted to take the cash payout rather than QXO stock

Meanwhile, Select Medical agreed to go private in a $3.9 billion deal led by Robert A. Ortenzio. The acquisition valued the company at $16.50 per share, a premium to its recent trading average, and its shares were delisted from the New York Stock Exchange on July 1.

First Half of 2026 Delivers Robust Returns for US Stocks

The first six months of 2026 were explosive for stocks, with the S&P 500 up 9.6% and the Nasdaq up more than 12%. The Dow delivered its best first-half performance since 2021, rising 8.9%. The small-cap Russell 2000 surged nearly 22% for its strongest start to a year since 1991. The S&P 500 is up more than 9% in 2026, while the tech-heavy Nasdaq Composite has gained 11%.

The US M&A market demonstrated exceptional strength in the first half of 2026. Announced M&A transaction volumes in the first quarter reached a record $1.4 trillion, approximately 50% higher than the same period in 2025. Technology, media and telecommunications accounted for the majority of M&A activity, followed by industrial, energy and power sectors.

Private equity transactions also increased significantly in the first quarter, exceeding $250 billion, representing nearly 50% year-over-year growth. These trends have established a strong foundation for M&A activity in the second half of the year.

Market participants should monitor the upcoming Federal Reserve meeting minutes for indications of how divided officials are on the rate hike debate flagged in June’s dot plot. The June-quarter earnings season, set to commence shortly, will be crucial in determining whether the current rotation out of technology stocks into defensive sectors can sustain. The Philadelphia Semiconductor Index’s two-day decline of over 11% warrants close attention, as chip stocks remain up approximately 78% year-to-date despite the recent pullback. The US jobs data has significantly reduced the probability of a September rate hike to 55%, but inflation concerns persist, particularly given potential energy price volatility.

Disclaimer: At HDFC SKY, we take utmost care and due diligence in curating and presenting news and market-related content. However, inadvertent errors or omissions may occasionally occur.

If you have any concerns, questions, or wish to point out any discrepancies in our content, please feel free to write to us at content@hdfcsec.com.

Please note that the information shared is intended solely for informational purposes and does not make any investment recommendations

Source