Weekly Wrap

Stocks resumed their climb during the holiday-shortened week, with the S&P 500 (+1.8%), Nasdaq Composite (+2.1%), and DJIA (+2.0%) all posting solid gains. The DJIA notched another series of record highs and capped its strongest first half since 2021, while the S&P 500 and Nasdaq built on their powerful second-quarter advances. Although volatility across semiconductor stocks remained elevated, renewed leadership from mega-cap growth stocks, broad strength in software, and another solid showing from financials helped offset the chip sector's weakness and kept investor sentiment constructive.

Leadership shifted noticeably back toward the market's largest growth stocks after last week's broader participation. The Vanguard Mega Cap Growth ETF climbed 4.3%, led by strong performances from companies including Alphabet, Apple, Microsoft, Meta Platforms, Tesla, and Amazon. The communication services sector (+4.9%) finished as the week's top-performing sector, while the consumer discretionary sector (+2.8%) also outperformed as investors rotated back into many of the market's largest technology-related companies. Software stocks added another important source of support, with the iShares Expanded Tech-Software ETF rising 6.1%, helping cushion the impact of weakness across semiconductor shares.

The semiconductor space experienced another volatile week, underscoring the increasingly selective nature of the AI trade. The PHLX Semiconductor Index fell 4.4%, though the headline decline masked significant day-to-day swings. The group rallied sharply to begin the week before surrendering those gains during the final two sessions as investors rotated away from memory-related names. Reports that Apple is seeking approval to purchase memory chips from China's ChangXin Memory Technologies weighed heavily on the memory complex. Even with the semiconductor pullback, investors remained willing to rotate within technology rather than broadly reduce exposure, with software and several mega-cap names continuing to attract buying interest.

Market participation remained constructive beneath the surface despite the return of mega-cap leadership. The financials sector (+3.7%) delivered another strong performance, while the health care (+2.1%), industrials (+1.4%), and materials (+1.1%) sectors also posted respectable gains. The energy sector (-1.0%) was the primary laggard as crude oil slipped another 2.3% amid continued progress toward a lasting agreement between the U.S. and Iran, easing concerns about disruptions through the Strait of Hormuz. Defensive areas of the market were more mixed, with the utilities (-1.0%) and real estate (-1.5%) sectors giving back some recent gains as Treasury yields moved modestly higher.

Overall, the week reinforced the market's resilience following an exceptionally strong second quarter. While semiconductor stocks continued to experience significant volatility, renewed leadership from mega-cap technology, impressive software strength, and healthy participation across several cyclical sectors allowed the major averages to extend their advance, suggesting investors remain comfortable rotating within the equity market rather than stepping away from risk altogether.

• Nasdaq Composite: +2.1% week-to-date
• DJIA: +2.0% week-to-date
• S&P 500: +1.8% week-to-date
• Russell 2000: -0.4% week-to-date
• S&P Mid Cap 400: -0.5% week-to-date

Monday:

The major averages started the new week with solid gains as investors rotated back into the market's largest technology names following last week's broadening in market leadership. The S&P 500 (+1.2%), Nasdaq Composite (+2.1%), and DJIA (+0.6%) all finished higher, with the Vanguard Mega Cap Growth ETF climbing 2.6%.

After ceding ground to other areas of the market last week, mega-cap technology stocks reasserted themselves. Five of the "Magnificent Seven" stocks finished higher, allowing the market-weighted S&P 500 to comfortably outperform the S&P 500 Equal Weight Index (+0.2%). The DJIA also benefited from its recent addition of Alphabet A (GOOGL 353.65, +16.26, +4.82%) Class A shares, giving the price-weighted index modestly greater exposure to today's rebound in mega-cap technology.

The communication services sector (+3.1%) led the advance, with Alphabet A (GOOGL 353.65, +16.26, +4.82%) providing solid leadership following its first full session as a DJIA component. Elsewhere, Comcast (CMCSA 24.22, +1.05, +4.53%) traded higher after announcing plans to separate NBCUniversal and Sky into an independent public company through a tax-free spin-off, while Charter Comm (CHTR 146.17, +12.53, +9.38%) gained after Bloomberg reported the company is in discussions with SpaceX (SPCX 164.06, +10.82, +7.06%) regarding a mobile phone partnership. The Comcast news, however, weighed on other broadband and wireless providers, including Verizon (VZ 44.10, -2.44, -5.24%), T-Mobile US (TMUS 173.97, -8.71, -4.77%), and AT&T (T 21.82, -0.90, -3.96%).

The consumer discretionary sector (+2.7%) also posted a strong gain as its mega-cap components rebounded. Tesla (TSLA 411.84, +32.13, +8.46%) reclaimed its 50-day moving average (405.03), while Amazon (AMZN 240.14, +7.45, +3.20%) benefited from encouraging Prime Day sales data.

Technology stocks experienced considerable intraday volatility before ultimately finishing as one of the market's leadership groups. Semiconductor stocks recovered from an early selloff that briefly sent the PHLX Semiconductor Index more than 2% lower before ending the session up 3.8%. Early weakness in memory names following reports that Apple (AAPL 281.74, -2.04, -0.72%) was seeking approval to purchase memory chips from China's ChangXin Memory Technologies ultimately gave way to broad buying interest, while Applied Materials (AMAT 694.64, +67.80, +10.82%), Corning (GLW 255.79, +34.74, +15.72%), and other AI infrastructure beneficiaries rallied on news of major long-term investment plans from Samsung and SK Hynix. Corning finished as the top-performing S&P 500 component.

Software also contributed to the advance, with the iShares Expanded Tech-Software Sector ETF (IGV) rising 1.9%.

The information technology sector (+1.7%) finished among the market's leaders despite late-session weakness in Super Micro Computer (SMCI 28.15, -2.48, -8.10%), which declined after Bloomberg reported that Taiwanese authorities raided one of the company's offices as part of an investigation into the smuggling of NVIDIA chips into China.

Elsewhere, the industrials (+0.8%), health care (+0.1%), and financials (+0.1%) sectors also finished higher.

The materials sector (-1.9%) was the day's weakest performer as construction materials names gave back a portion of last week's gains, with Martin Marietta (MLM 581.23, -34.83, -5.65%) particularly weak after announcing the acquisition of Lhoist North America.

The real estate sector (-0.7) also lagged, while the defensive consumer staples (-0.4%) and utilities (-0.5%) sectors underperformed as investors rotated back toward growth-oriented stocks.

Overall, today's session marked a convincing rebound for the market's largest technology names after they ceded leadership last week. The S&P 500 and Nasdaq Composite recovered roughly half of last week's losses, while the S&P 500 also reclaimed its 50-day moving average (7,371), which it briefly lost in Friday's session.

U.S. Treasuries started the holiday week on a quiet note with 10-year note yield and shorter tenors finishing lower for the first time since last Monday while the long bond outperformed, settling just above its unchanged level. The 2-year note yield settled up two basis points to 4.11%, and the 10-year note yield finished unchanged at 4.37%. 

There was no economic data of note. 

Tuesday:

Stocks finished the second quarter on a strong note as another solid session across semiconductor names helped lift the S&P 500 (+0.8%), Nasdaq Composite (+1.5%), and DJIA (+0.3%). The DJIA notched another record closing high, capping off the strongest first half of the year for the Dow since 2021 and the best quarterly performance for the S&P 500 and Nasdaq Composite since 2020. Additionally, the S&P 500 and Nasdaq have now recovered nearly all of last week's pullback.

Semiconductor stocks once again led the market, with the PHLX Semiconductor Index climbing 3.9% to build on yesterday's rebound. Firm gains across major chipmakers such as Advanced Micro Devices (AMD 580.91, +41.42, +7.68%) and Intel (INTC 139.63, +7.91, +6.01%) were notched, while Sandisk (SNDK 2273.73, +223.34, +10.89%) led memory names higher, lifting the information technology sector (+2.6%) and reinforcing the return to mega-cap technology leadership that began earlier this week.

Technology leadership extended beyond semiconductors, though gains elsewhere were more selective. The Vanguard Mega Cap Growth ETF (+1.7%) posted another solid advance, with Apple (AAPL 289.36, +7.62, +2.70%) and Microsoft (MSFT 373.02, +4.45, +1.21%) adding to this week's gains.

The consumer discretionary sector (+0.1%) finished little changed as strength in Tesla (TSLA 420.60, +8.76, +2.13%) was offset by weakness elsewhere, while the communication services sector finished on its flat line despite another solid session from Alphabet (GOOG 353.33, +2.05, +0.58%).

Continued weakness in broadband and wireless providers, including Verizon (VZ 42.34, -1.76, -3.99%) and AT&T (T 20.69, -1.13, -5.18%), limited the sector's advance following Comcast's (CMCSA 24.55, +0.33, +1.36%) restructuring announcement earlier this week.

Outside of technology, participation was more narrow as momentum shifts back toward growth stocks. The industrials sector (+1.4%) finished as one of the day's top performers, supported by another strong session for electrical equipment companies that continued to move in tandem with semiconductor stocks. Caterpillar (CAT 1064.90, +31.71, +3.07%) also stood out among the Dow components.

Market breadth was relatively balanced, with advancers and decliners finishing nearly even on both the NYSE and Nasdaq. Even so, the Russell 2000 (+0.5%) and S&P Mid Cap 400 (+0.6%) both posted respectable gains, suggesting the broader market continued to participate despite the renewed leadership from mega-cap technology.

Elsewhere, the real estate sector (-2.2%) finished lower for a second consecutive session, pressured by a sharp decline in Digital Realty Trust (DLR 179.58, -11.00, -5.77%) following its announced data center acquisition.

The defensive consumer staples (-1.5%), utilities (-1.5%), and health care (-1.3%) sectors also lagged as investors favored growth-oriented areas of the market.

The energy sector (-0.8%) finished lower as crude oil prices eased while investors continued monitoring developments surrounding the latest round of U.S.-Iran negotiations.

Overall, today's session reinforced that mega-cap technology has reclaimed market leadership after briefly taking a back seat last week. At the same time, respectable gains across small- and mid-cap stocks suggest the recent improvement in market participation remains intact, allowing the major averages to recover nearly all of last week's decline without a meaningful deterioration in underlying breadth.

U.S. Treasuries retreated on Tuesday, with yields finishing June and Q2 just above last week's lows. The 2-year note yield settled up three basis points to 4.14%, and the 10-year note yield settled up four basis points to 4.42%.

Reviewing today's data:

• April FHFA Housing Price Index -0.1% (Briefing.com consensus 0.2%); Prior was revised to 0.2% from 0.1%
• April S&P Case-Shiller Home Price Index 1.1% (Briefing.com consensus 0.9%); Prior was revised to 0.9% from 0.8%
• June Chicago PMI 56.7 (Briefing.com consensus 60.0); Prior 62.7
• June Consumer Confidence 91.2 (Briefing.com consensus 94.2); Prior was revised to 90.6 from 93.1
  • The key takeaway from the report is that the June increase followed a downward revision to May's reading, so there is some persistent caution in confidence as the expectations index remains below a level that has traditionally signaled an upcoming recession.
• May JOLTS - Job Opening 7.594 mln; Prior was revised to 7.585 mln from 7.618 mln

Wednesday: 

Stocks kicked off the third quarter on a relatively quiet note following a powerful second quarter for equities. The S&P 500 (-0.2%) and Nasdaq Composite (-0.7%) finished modestly lower after giving back earlier gains, while the DJIA finished on its flat line after touching another intraday record high. Despite a sharp pullback across semiconductor stocks, losses at the index level remained surprisingly contained as strength across several other mega-cap technology names and the broader market helped cushion the decline.

Semiconductor stocks paused after leading the market higher over the previous two sessions. The PHLX Semiconductor Index fell 6.3%, with weakness spanning memory names, chip equipment manufacturers, and AI infrastructure companies, suggesting the retreat was driven more by profit-taking than any single industry-specific development. Corning (GLW 220.70, -34.74, -13.60%) and KLA Corporation (KLAC 266.19, -35.52, -11.77%) finished among the S&P 500's weakest performers.

Despite the pressure on chipmakers, the broader technology complex proved far more resilient. The information technology sector (-1.8%) recovered from a steeper intraday decline as software stocks continued to outperform. The iShares Expanded Tech-Software ETF (IGV) climbed 3.0%, while Apple (AAPL 294.38, +5.02, +1.73%) and Microsoft (MSFT 384.28, +11.26, +3.02%) both posted solid gains.

Palantir Technologies (PLTR 125.73, +9.06, +7.77%) also outperformed after President Trump's latest financial disclosure showed he purchased between $100,000 and $250,000 worth of the company's shares. The Vanguard Mega Cap Growth ETF finished flat, underscoring the resilience across the market's largest growth stocks despite the sharp decline in semiconductor shares.

The communication services sector (+2.6%) finished with the widest gain, driven by Meta Platforms' (META 612.91, +49.62, +8.81%) surge after Bloomberg reported the company plans to build a cloud business that would sell access to AI computing infrastructure.

The consumer discretionary sector (+0.8%) also outperformed as Amazon (AMZN 241.70, +3.36, +1.41%), Tesla (TSLA 425.38, +4.78, +1.14%), and NIKE (NKE 43.06, +2.01, +4.90%) all finished higher. Nike's better-than-feared quarterly results helped reinforce investor confidence that the company's turnaround continues to make gradual progress despite management's cautious near-term outlook.

The financials sector (+2.1%) also posted broad-based gains. FactSet (FDS 245.55, +15.47, +6.72%) was among the sector's top-performing components after topping earnings expectations, while Coinbase Global (COIN 159.24, +13.05, +8.93%) and Robinhood Markets (HOOD 108.65, +8.37, +8.35%) advanced alongside a rebound in Bitcoin prices.

Elsewhere, the tone was more mixed. General Mills (GIS 37.77, +2.97, +8.53%) rallied after topping quarterly earnings expectations and issuing fiscal 2027 guidance that was broadly in line with estimates, though the consumer staples sector (-0.3%) still finished lower. Walmart (WMT 108.82, -4.44, -3.92%) remained under pressure after CNBC's David Faber reported that Cleveland Research issued a negative report citing slowing comparable sales and warning the retailer may need to lower prices to clear excess inventory.

Constellation Brands (STZ 136.88, -2.21, -1.59%) also declined despite beating earnings expectations and reaffirming its fiscal 2027 outlook.

The utilities sector (-1.1%) continued its recent underperformance, while the industrials sector (-1.1%) also lagged as Caterpillar (CAT 991.41, -73.49, -6.90%) pulled back from record highs.

Crude oil futures settled $0.83 lower (-1.2%) at $68.69 per barrel as Axios reported that the U.S. is attempting to persuade Iran not to impose tolls on shipping through the Strait of Hormuz. Bloomberg separately reported that traffic through the waterway has increased to roughly 10 million barrels per day with support from the U.S. military, easing concerns about disruptions to global energy supplies.

Outside the S&P 500, the Russell 2000 (-0.4%) slipped into negative territory after reaching another intraday record high, while the S&P Mid Cap 400 (-0.8%) finished lower.

Overall, today's session suggested that investors remain willing to rotate within technology rather than broadly reduce risk following a powerful second quarter for equities. The PHLX Semiconductor Index endured a sizeable decline, yet the Vanguard Mega Cap Growth ETF finished flat and the S&P 500 Equal Weight Index (+0.2%) outperformed its market-weighted counterpart, highlighting the market's resilience beneath the surface. As the third quarter gets underway, today's action suggests the broadening in market participation remains intact even as leadership continues to evolve.

U.S. Treasuries extended this week's losses during the first session of July, though intraday action was largely confined to a sideways range near rebound highs. The 2-year note yield settled up two basis points to 4.16%, and the 10-year note yield settled up six basis points to 4.48%. 

Reviewing today's data:

• Weekly MBA Mortgage Applications Index 0.0%; Prior 1.0%
• June ADP Employment Change 98K (Briefing.com consensus 112K); Prior 122K
• June S&P Global U.S. Manufacturing PMI - Final 53.9; Prior 55.7
• May Construction Spending 0.1% (Briefing.com consensus 0.5%); Prior was revised to 0.3% from 0.4%
  • The key takeaway from the report is that public construction spending was the driver of the modest growth in total construction spending in June. Private construction spending activity was disappointing.
• June ISM Manufacturing Index 53.3% (Briefing.com consensus 53.8%); Prior 54.0%
  • The key takeaway from the report is that there was a general slowdown indicated versus May across most components of the report, yet the slowdown that will matter most is the one seen in the prices index, which is still quite high but nonetheless moving in the preferred direction.

Thursday:

The major averages finished mixed today as another sharp pullback across semiconductor stocks and select mega-cap names masked broad strength across several defensive sectors. The S&P 500 finished flat, the Nasdaq Composite (-0.8%) ended lower, while the DJIA (+1.1%) notched record highs.

Despite the divergence beneath the surface, all three major averages remain up between 1.8% and 2.1% for the week. Semiconductor stocks remained under pressure for a second consecutive session, with the PHLX Semiconductor Index falling 5.4% as the recent momentum trade continued to unwind. Weakness was particularly pronounced among memory names after Bloomberg reported that Apple (AAPL 308.63, +14.25, +4.84%) is lobbying for permission to purchase memory chips from China's ChangXin Memory Technologies.

The development weighed on names such as Sandisk (SNDK 1745.00, -287.22, -14.13%) and helped leave the information technology sector (-1.5%) as the day's weakest performer.

Pressure across other areas of mega-cap technology was also more selective than recent sessions. Meta Platforms (META 582.88, -30.03, -4.90%) gave back a portion of yesterday's sharp advance, while Tesla (TSLA 392.82, -32.48, -7.64%) extended its intraday reversal despite reporting better-than-expected second-quarter deliveries earlier in the session. Those moves also weighed on the communication services (-0.7%) and consumer discretionary (-0.7%) sectors, the only other S&P 500 sectors to finish in negative territory. The Vanguard Mega Cap Growth ETF finished 1.0% lower.

However, Genuine Parts (GPC 132.57, +15.17, +12.92%) finished as the top-performing S&P 500 component after Bloomberg reported that O'Reilly Auto (ORLY 90.25, -2.44, -2.63%) is interested in acquiring the company's automotive parts business.

Away from technology, leadership rotated decisively toward more defensive areas of the market. The health care (+2.7%), consumer staples (+2.4%), and utilities (+2.3%) sectors finished with the largest gains, while the materials sector (+2.1%) also outperformed. Health care stocks continued to build on their recent momentum, with hospital operators such as Universal Health (UHS 158.33, +7.75, +5.15%) and HCA (HCA 410.50, +17.26, +4.39%) among the sector's strongest performers after the Centers for Medicare & Medicaid Services proposed updates aimed at strengthening Medicare program integrity, combating fraud, and expanding access to home health care.

Today's leadership differed from recent sessions in one notable respect. While the S&P 500 Equal Weight Index (+0.8%) finished with a nice gain, smaller-cap stocks did not participate in the rotation out of tech, with the Russell 2000 (-0.6%) and S&P Mid Cap 400 (-0.4%) both ending lower after the Russell reached record highs earlier this week.

Today's session reinforced that investors continue to differentiate aggressively beneath the surface rather than broadly reduce equity exposure. While semiconductor stocks remained under pressure and weighed on the technology-heavy indices, continued leadership from health care and several other defensive groups helped the DJIA notch another record high and kept the broader market's weekly advance largely intact.

U.S. Treasuries finished the holiday-shortened week on a mixed, but generally flat note, locking in losses for the week. The 2-year note yield settled down two basis points to 4.14% (+5 basis points this week), and the 10-year note yield settled up one basis point to 4.49% (+12 basis points this week). 

Bond and equity markets will be closed tomorrow, returning for a full session on Monday.

Reviewing today's data:

• June Nonfarm Payrolls 57K (Briefing.com consensus 110K); Prior was revised to 129K from 172K, June Nonfarm Private Payrolls 49K (Briefing.com consensus 88K); Prior was revised to 97K from 120K, June Unemployment Rate 4.2% (Briefing.com consensus 4.3%); Prior 4.3%, June Average Hourly Earnings 0.3% (Briefing.com consensus 0.3%); Prior 0.3%, June Average Workweek 34.3 (Briefing.com consensus 34.3); Prior 34.3
  • The key takeaway from the report for the market, which likes to see the good in the bad, is that the softer payrolls and pressure on real earnings should temper concerns about an imminent rate hike.
• Weekly Initial Claims 215K (Briefing.com consensus 220K); Prior was revised to 216K from 215K, Weekly Continuing Claims 1.814 mln; Prior was revised to 1.812 mln from 1.821 mln
  • The key takeaway from the report is that initial jobless claims continue to track at low levels, offering a nice cue that suggests the labor market, overall, remains on solid ground.
• May Factory Orders -1.3% (Briefing.com consensus 1.5%); Prior was revised to 5.3% from 4.8%
  • The key takeaway from the report is that the headline weakness was a function of a large decline in volatile transportation equipment orders. Exclude that factor, and factory orders were quite solid in May.

Friday:

Market closed for Independence Day.