The S&P 500 Index ($SPX) (SPY) on Thursday closed unchanged, the Dow Jones Industrial Average ($DOWI) (DIA) closed up +1.14%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -1.61%. September E-mini S&P futures (ESU26) fell -0.25%, and September E-mini Nasdaq futures (NQU26) fell -1.82%.
Stock indexes erased early gains on Thursday and settled mixed, with the S&P 500 posting a 2-week high and the Dow Jones Industrial Average hitting a new all-time high. Chipmakers sold off for a second day on Thursday, weighing on the broader market and dragging the Nasdaq 100 sharply lower. Chipmakers opened lower on Thursday after South Korea’s Kospi Index fell more than -7% to a 3-week low, led by a plunge in SK Hynix and Samsung Electronics on renewed doubts over the sustainability of the AI buildout boom. Chipmakers also had some negative carryover from Wednesday, when Meta Platforms said it plans to sell computing power, raising questions about excess AI capacity.
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Stocks initially opened higher on Thursday and found support after a smaller-than-expected increase in US nonfarm payrolls, which bolstered speculation that the Fed will be unable to raise interest rates anytime soon. US hiring slowed sharply in June and was revised lower in May even as the unemployment rate fell to a 1-year low. Also, the smaller-than-expected decline in the May factory orders report was supportive of stocks.
US Jun nonfarm payrolls rose +57,000, weaker than expectations of +113,000, and May nonfarm payrolls were revised lower to +129,000 from the originally reported +172,000. The Jun unemployment rate unexpectedly fell -0.1 to a 1-year low of 4.2%, signaling a stronger labor market than expectations of no change at 4.3%.
US Jan average hourly earnings rose +0.3% m/m and +3.5% y/y, right on expectations.
US weekly initial unemployment claims unexpectedly fell -1,000 to 215,000, showing a stronger labor market than expectations of an increase to 218,000.
US May factory orders fell -1.3% m/m, a smaller decline than expectations of -2.0% m/m. Also, May factory orders ex-transportation rose +1.9% m/m, stronger than expectations of +1.0% m/m and the biggest increase in more than 4 years.
The outlook for strong Q2 earnings is a bullish factor for stocks. Forecasts compiled by Bloomberg Intelligence suggest Q2 earnings may increase by 23%, close to Q1’s blowout earnings of 30%, which was more than double the 12% analysts had expected. AI spending is expected to account for most of earnings, with AI infrastructure stocks set to contribute nearly 60% of the S&P 500’s earnings-per-share growth in Q2.
WTI crude oil (CLQ26) fell to a fresh 4.25-month low on Thursday as global supplies increase. The United Arab Emirates ramped up shipments of crude oil and condensates by 30% in June to more than 3.9 million bpd, restoring its oil exports to pre-war levels. Also, a US official said commercial shipping through the Strait of Hormuz has surged over the past few weeks, with American military support helping boost oil flows to more than 10 million bpd.
The markets are discounting an 18% chance of a +25 bp rate hike at the next FOMC meeting on July 28-29.
Overseas stock markets settled higher on Thursday. The Euro Stoxx 50 rallied to a new record high and closed up +1.24%. China’s Shanghai Composite climbed to a 1-week high and closed up +0.4%. Japan’s Nikkei-225 Stock Average closed up +0.59%.
Interest Rates
September 10-year T-notes (ZNU6) on Thursday settled unchanged, and the 10-year T-note yield fell -0.2 bp to 4.477%. Sep T-notes rebounded from a 1-week low on Thursday, and the 10-year T-note yield fell from a 1-week high of 4.501%. T-notes recovered from early losses on Thursday amid signs of a slowdown in the US labor market after Jun nonfarm payrolls rose less than expected and May nonfarm payrolls were revised lower. T-notes also found support on Thursday’s decline in WTI crude oil to a 4.25-month low, which lowers inflation expectations.
European government bond yields moved higher on Thursday. The 10-year German bund yield rose to a 1-week high of 2.929% and finished up +2.6 bp to 2.904%. The 10-year UK gilt yield rose +1.9 bp to 4.776%.
Italy’s May unemployment rate unexpectedly fell -0.1 to a record low of 5.0% (data from 2004), showing a stronger labor market than expectations of no change at 5.1%.
BOE Governor Andrew Bailey said interest rate cuts are “off the table at the moment,” as households have yet to feel the full effect of the Iran war.
Swaps are discounting a 4% chance of a +25 bp ECB rate hike at its next policy meeting on July 23.
US Stock Movers
Chipmakers and AI infrastructure stocks retreated for a second session on Thursday, weighing on the broader market. The iShares Semiconductor ETF (SOXX) fell more than -5%. SanDisk (SNDK) closed down more than -14% to lead losers in the S&P 500 and Nasdaq 100, and KLA Corp (KLAC) closed down more than -12%. Also, Marvell Technology (MRVL) closed down more than- 11%, and Lam Research (LRCX) and Seagate Technology Holdings Plc (STX) closed down more than -10%. In addition, Western Digital (WDC) closed down by more than -9%, Applied Materials (AMAT) closed down by more than -8%, and ARM Holdings Plc (ARM) closed down more than -6%. Finally, Micron Technology (MU) and Intel (INTC) closed down more than -5%, and Advanced Micro Devices (AMD), Microchip Technology (MCHP), and ASML Holding NV (ASML) closed down more than -4%.
Software stocks rose for a second day on Thursday, a positive for the overall market. Adobe (ADBE) closed up more than +4% after HSBC upgraded the stock to buy from hold with a price target of $308. Also, Autodesk (ADSK), Intuit (INTU), and Workday (WDAY) closed up more than +3%, and Palantir Technologies (PLTR) closed up more than +2% after DA Davidson upgraded the stock to buy from neutral with a price target of $175. In addition, Microsoft (MSFT) and Salesforce (CRM) closed up more than +1%.
Mining stocks rallied on Thursday amid a surge in gold and silver prices. Coeur Mining (CDE), Hecla Mining (HL), Anglogold Ashanti (AU), Barrick Mining (B), and Newmont Corp (NEM) closed up more than +4%, and Freeport McMoran (FCX) closed up +0.71%.
Jabil Inc (JBL) closed down by more than -9% after announcing plans to offer a mixed shelf of debt securities, though the size of the offering was not disclosed.
Tesla (TSLA) closed down more than -7% after the company’s Q2 deliveries beat expectations but failed to impress investors.
Genuine Parts (GPC) closed up more than +12% to lead gainers in the S&P 500 on reports that O’Reilly Automotive has put in a bid for the company.
AeroVironment (AVAV) closed up more than +10% after being awarded a US Army contract valued at up to $500 million for the procurement of commercial-unmanned aerial systems and counter small-unmanned aerial systems capabilities.
Apple (AAPL) closed up more than +4% to lead gainers in the Dow Jones Industrials after Nikkei reported the company told its suppliers it plans to produce 10 million foldable iPhones this year, up from an earlier forecast of 7 million to 8 million.
Robinhood Markets (HOOD) closed up more than +3% after Mizuho Securities raised its price target on the stock to $130 from $115.
Earnings Reports(7/6/2026)
None.
On the date of publication,
Rich Asplund
did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.
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