Weekly Wrap

The market endured a difficult week on the surface, but the weakness was far more concentrated than the major averages alone would suggest. The S&P 500 fell 2.0% and the Nasdaq Composite declined 4.6% as another sharp pullback across semiconductor and mega-cap technology stocks weighed heavily on index performance. Beneath the surface, however, investors continued rotating into other areas of the market, with the DJIA (+0.6%), Russell 2000 (+1.0%), and S&P Mid Cap 400 (+0.7%) all finishing higher. The S&P 500 Equal Weight Index also gained 1.6% for the week, underscoring the improving breadth beneath the market's largest components. Falling Treasury yields and another retreat in oil prices further supported defensive and rate-sensitive sectors throughout the week.

Technology remained the dominant story, though leadership became increasingly fragmented. Semiconductor stocks experienced another volatile stretch, with the PHLX Semiconductor Index dropping 7.9% despite a powerful post-earnings rally from Micron that briefly reignited enthusiasm across memory names. The broader group struggled to build on those gains as investors continued trimming exposure to AI infrastructure stocks following weakness across South Korean chipmakers early in the week and renewed concerns surrounding the sector later in the week. Meanwhile, software stocks and several large-cap technology names periodically outperformed, highlighting an increasingly selective approach toward technology rather than broad-based selling. The information technology sector ultimately declined 5.4%, while the Vanguard Mega Cap Growth ETF fell 4.8%.

The week's rotation extended well beyond technology. The health care sector (+7.9%) was the clear leader after several acquisition announcements and strong performances from large pharmaceutical and biotechnology companies, while the real estate (+4.0%) and utilities (+3.9%) sectors also posted sizable gains as Treasury yields steadily declined. Homebuilders and construction-related names also benefited from lower yields and easing energy prices, with the iShares U.S. Home Construction ETF advancing 5.7%. The continued strength across these groups reinforced the notion that investors were rotating within equities rather than exiting the market altogether.

Macroeconomic developments generally supported that rotation. Treasury yields trended lower throughout the week as economic data, including the PCE inflation report, largely met expectations while crude oil prices continued to retreat. WTI crude fell roughly 6% during the week as negotiations between the U.S. and Iran continued to progress and traffic through the Strait of Hormuz normalized, helping alleviate inflation concerns while supporting travel, construction, and other economically sensitive industries.

By week's end, the market remained defined by a clear divergence beneath the surface. While persistent weakness across semiconductor and mega-cap technology stocks drove the headline indices lower, improving breadth, leadership from defensive and rate-sensitive sectors, and continued resilience across much of the broader market suggested that investor appetite for equities remained intact despite heightened volatility within the market's most influential growth stocks.

• Russell 2000: +1.0% week-to-date
• S&P Mid Cap 400: +0.7% week-to-date
• DJIA: +0.6% week-to-date
• S&P 500: -2.0% week-to-date
• Nasdaq Composite: -4.6% week-to-date

Monday:

The major averages started this full week of trading that is sandwiched between two holiday-abbreviated weeks on a mostly lower note, with the S&P 500 (-0.4%) and Nasdaq Composite (-1.3%) pressured by weakness across mega-cap stocks while the DJIA (+0.3%) was supported by some rotational gains in the broader market.

Stocks opened mostly higher, supported by reports from both sides that negotiations between the U.S. and Iran are progressing measurably, while chipmaker stocks showed an extension of recent strength. However, losses across mega-cap stocks outside the semiconductor space quickly widened, pushing the major averages into mostly lower territory, where they traded in a relatively stable range for the remainder of the session.

Alphabet (GOOG 348.78, -18.68, -5.08%) was one of the worst-performing S&P 500 components, sinking below its 50-day moving average (365.20) after a top engineering executive, John Jumper, decided to leave Google DeepMind and join Anthropic. The headline added to lingering concerns over the company's massive AI capital expenditure plans, with the stock now down nearly 8% in June. Meta Platforms (META 563.85, -13.37, -2.32%) also traded lower while Netflix (NFLX 72.88, -4.50, -5.82%) fell to its lowest level since late 2024, and the communication services sector (-3.8%) ended the day as the worst-performing S&P 500 sector.

Amazon's (AMZN 232.79, -11.60, -4.75%) weakness ahead of tomorrow's Prime Day event weighed similarly on the consumer discretionary sector (-2.3%), and the Vanguard Mega Cap Growth ETF finished 1.4% lower.

SpaceX (SPCX 154.60, -30.40, -16.43%) retreated sharply for the third consecutive session, which contributed to the underperformance of the Nasdaq Composite.

Meanwhile, the top-weighted information technology sector had a flat showing today, with Microsoft (MSFT 367.34, -12.06, -3.18%) a "magnificent seven" laggard while NVIDIA (NVDA 208.66, -2.03, -0.96%) also traded lower despite the strength across semiconductor names.

Micron (MU 1211.38, +77.39, +6.82%) was a standout ahead of its earnings release Wednesday evening, while AI-infrastructure names such as Super Micro Computer (SMCI 35.46, +4.80, +15.66%) and Corning (GLW 209.85, +14.93, +7.66%) traded even higher.

Elsewhere, seven S&P 500 sectors traded higher, highlighting some rotational interest across the broader market. The real estate sector (+1.4%) captured the widest gain, while the energy sector (+1.2%) finished similarly despite crude oil retreating today after several sharp retreats last week.

The health care sector (+0.9%) was another outperformer, boosted by a strong showing from AbbVie (ABBV 230.06, +13.57, +6.27%) after the company agreed to acquire Apogee Therapeutics (APGE 132.55, +42.17, +46.66%) for $135.11 per share in cash.

Outside of the S&P 500, the Russell 2000 (+0.8%) and S&P Mid Cap 400 (+0.4%) outperformed, furthering the idea that not all of the money taken out of mega-cap tech today left the stock market entirely.

Overall, today's session was characterized by continued selling pressure across several mega-cap stocks, which obscured otherwise constructive underlying action. Strength across seven S&P 500 sectors and outperformance from both the Russell 2000 and S&P Mid Cap 400 suggest that investors remained engaged in equities, even as leadership continued to shift beneath the surface.

U.S. Treasuries began the week with losses across the curve after a lower start was followed by continued selling as the day went on. Treasuries recorded more than half of their losses at the open after the three-day holiday weekend featured some Friday selling in the futures market. The 2-year note yield settled up five basis points to 4.23%, and the 10-year note yield settled up six basis points to 4.51%.

There was no economic data of note today.

Tuesday:

The major averages finished lower today, as pronounced weakness across semiconductor stocks masked a considerably more balanced performance beneath the surface. The S&P 500 (-1.4%) and Nasdaq Composite (-2.2%) both retreated sharply, while the DJIA (-0.1%) spent the session near its flat line. Notably, the S&P 500 Equal Weight Index (-0.4%) finished with a much narrower loss than its market-weighted counterpart, highlighting the concentrated nature of today's weakness.

The pressure was most apparent in the semiconductor space, where the PHLX Semiconductor Index tumbled 7.9%. The selloff lacked a definitive company-specific catalyst but followed a nearly 10% overnight decline in South Korea's Kospi, driven in part by significant losses in SK Hynix and Samsung Electronics. Bloomberg also reported that South Korea's top financial regulator expressed regret over allowing several leveraged ETFs tied to the two companies to launch.

The overseas weakness spilled into U.S. chipmakers, particularly memory-related names. Sandisk (SNDK 1963.60, -310.13, -13.64%) and Micron (MU 1051.77, -159.61, -13.18%) were among the notable laggards, while equipment and analog names such as Lam Research (LRCX 371.33, -38.21, -9.33%) and onsemi (ON 116.97, -14.58, -11.08%) also endured heavy selling pressure. As a result, the information technology sector (-3.7%) finished as the weakest S&P 500 sector by a wide margin.

The Vanguard Mega Cap Growth ETF declined 2.1%, though weakness was not universal across large-cap technology stocks. IBM (IBM 264.94, +12.72, +5.04%) was the best-performing Dow component after JPMorgan upgraded the stock to Overweight from Neutral, while Microsoft (MSFT 373.94, +6.60, +1.80%) recovered some of yesterday's losses amid a decent day for software names.

Notably, SpaceX (SPCX 156.03, +1.43, +0.92%) bucked the trend and snapped a three-day skid after Bloomberg reported that the company is seeking to raise $25 billion through a bond offering. Demand for the deal appeared robust, with reports indicating orders approached $90 billion. The gain came after SPCX briefly dipped below its $150 debut price earlier in the session.

Elsewhere, electrical equipment names such as GE Vernova (GEV 1035.21, -92.38, -8.19%) and Vertiv (VRT 318.20, -39.76, -11.11%) moved lower in sympathy with semiconductor stocks, weighing on the industrials sector (-2.0%).

The consumer discretionary sector (-0.9%) also finished lower as Tesla (TSLA 381.53, -23.52, -5.81%) lagged and Carnival (CCL 28.72, -1.47, -4.87%) fell following an earnings report that included downside forward guidance.

Away from technology, the tone was noticeably more constructive. Six S&P 500 sectors finished higher, led by the consumer staples sector (+1.8%) as several food-related names rebounded from depressed levels.

The health care (+1.4%) and utilities (+0.8%) sectors also outperformed, while the real estate sector (+1.4%) continued its recent run of strength and remains the best-performing S&P 500 sector this week.

The defensive leadership coincided with a rise in volatility, as the CBOE Volatility Index climbed 12.4% to 19.43. Even so, lower oil prices and easing Treasury yields continued to support several rate-sensitive areas of the market.

Outside the S&P 500, the Russell 2000 (-1.0%) retreated from yesterday's all-time high levels, while the S&P Mid Cap 400 (-1.0%) logged a similar loss.

Despite the sharp decline in semiconductor stocks, today's session offered few signs of broad market stress. Participation remained relatively healthy beneath the surface, with six S&P 500 sectors finishing higher and the equal-weighted index significantly outperforming its market-weighted counterpart. The next test for the group arrives tomorrow evening with Micron's earnings report, which could help determine whether investors once again view weakness across semiconductor stocks as a buying opportunity.

U.S. Treasuries recorded modest gains on Tuesday, though intraday action turned into a sideways affair, leaving the complex near today's opening levels at the close. The late pullback included the front end, even though the U.S. Treasury sold $69 billion in 2-year notes to solid demand. The 2-year note yield settled down four basis points to 4.19%, and the 10-year note yield settled down two basis points to 4.49%. 

Reviewing today's data:

• June S&P Global U.S. Manufacturing PMI - Prelim 55.7; Prior 55.1
• June S&P Global U.S. Services PMI - Prelim 51.3; Prior 50.7

Wednesday:

The major averages finished the midweek session mostly lower as mounting losses across semiconductor and mega-cap names weighed on the S&P 500 (-0.1%) and Nasdaq Composite (-0.4%) this afternoon. The DJIA (+0.4%) escaped with a modest gain following another solid showing from the broader market that was supported by another retreat in oil prices and Treasury yields.

Stocks traded in a relatively stable range for the first half of the session. Semiconductor performance was mixed, despite premarket gains indicating a possible buy-the-dip move after yesterday's retreat and a solid rebound across South Korean tech stocks.

Meanwhile, other mega-cap tech names provided the market with the boost that some investors were expecting from the semiconductor group. At midday, all of the "magnificent seven" cohort traded higher, as mega-caps took part in the broader rally as oil prices and Treasury yields retreated. The gains would not hold.

Only one "magnificent seven" name would finish with a slight gain, sending the Vanguard Mega Cap Growth ETF (-0.4%) lower after it had held a nearly 1% gain earlier in the session.

The information technology sector (-0.6%) finished as one of the worst-performing S&P 500 sectors as its largest components reversed course. Losses ramped up across semiconductor names, but the group made a last-minute push higher ahead of Micron's (MU 1047.22, -4.55, -0.43%) earnings release that saw the PHLX Semiconductor Index (-0.2%) finish with just a modest loss.

The communication services sector (-0.6%) also finished lower, with Alphabet (GOOG 345.02, -1.06, -0.30%) reversing an earlier gain after Bloomberg reported that two additional artificial intelligence researchers have left the company to join Anthropic.

While the afternoon reversal across technology capped gains at the index level, the broader market continued to perform well, reinforcing analyst commentary that market leadership is steadily broadening beneath the surface.

Six S&P 500 sectors finished higher, with the industrials sector (+1.2%) leading the advance as progressing negotiations between the U.S. and Iran and increased traffic through the Strait of Hormuz sent oil prices and Treasury yields firmly lower. The lower-yield environment was particularly supportive of construction-related names such as Builders FirstSource (BLDR 85.41, +8.68, +11.31%), while airlines such as United Airlines (UAL 130.54, +8.99, +7.40%) benefited from the retreat in oil prices, with WTI crude dipping below $70 per barrel.

The consumer discretionary sector (+0.8%) fared similarly, with travel-related names such as Booking Holdings (BKNG 181.28, +12.34, +7.30%) and Expedia Group (EXPE 262.15, +17.08, +6.97%) moving sharply higher, while homebuilders including PulteGroup (PHM 135.70, +9.15, +7.23%) and Lennar (LEN 92.96, +5.61, +6.42%) also outperformed. The iShares U.S Home Construction ETF finished 6.2% higher.

The defensive utilities (+1.1%), health care (+0.8%), and consumer staples (+0.6%) also extended this week's outperformance amid the volatility across tech names.

Unsurprisingly, the energy sector (-1.7%) was a laggard amid the retreat in oil prices. Outside of the S&P 500, the Russell 2000 (+0.4%) and S&P Mid Cap 400 (+0.6%) escaped with a portion of their earlier gains.

Overall, today's session extended the recent trend of heightened volatility across semiconductor and other mega-cap technology stocks, but it did little to derail the market's improving underlying backdrop. The DJIA's year-to-date gain now stands at 7.9%, edging ahead of the S&P 500's 7.5% advance as investors continue rotating into other pockets of the market rather than exiting equities altogether. Attention now turns to Micron's earnings report after the close, which could determine whether semiconductor stocks once again attract a meaningful buy-the-dip bid following another volatile session.

U.S. Treasuries climbed on Wednesday, making for a swift continuation of yesterday's bounce, which followed the highest settlement in the 2-year note yield since February 2025.  The complex settled on highs even though the U.S. Treasury's $70 billion 5-year note auction at 13:00 ET met underwhelming demand. The 2-year note yield settled down five basis points to 4.14%, and the 10-year note yield settled down nine basis points to 4.40%. 

Reviewing today's data:

• Weekly MBA Mortgage Applications Index 1.0%; Prior -3.8%
• Q1 Current Account Balance -$226.8 bln (Briefing.com consensus -$237.5 bln); Prior was revised to -$221.1 bln from -$190.7 bln
• May New Home Sales 580K (Briefing.com consensus 627K); Prior was revised to 626K from 622K
  • The key takeaway from the report is that new home sales in May were pressured by affordability constraints tied to rising mortgage rates. Notably, the West region, which features the highest-priced homes, saw the biggest hit to sales month-over-month; however, there was also weakness in the more affordable South region, which is the nation's largest homebuilding market.

Thursday:

The stock market finished mixed today as a strong rally across memory and semiconductor stocks was offset by continued weakness in several mega-cap technology names, while broad strength across cyclical and defensive sectors kept the underlying tone constructive. The S&P 500 finished flat, the Nasdaq Composite (-0.5%) finished modestly lower, and the DJIA (+0.1%) eked out a gain after touching another all-time intraday high.

Micron (MU 1213.56, +165.05, +15.74%) was among the session's top performers after delivering a stellar beat-and-raise earnings report that reinforced exceptionally strong demand across the memory market. The results sparked broad gains among memory-related names and helped the PHLX Semiconductor Index finish 3.6% higher, though not before the group endured another volatile session that saw the index surrender an opening gain of more than 5% before recovering into the close.

However, the same memory-pricing dynamics that benefited Micron weighed on several of the market's largest technology companies. Apple (AAPL 275.15, -17.93, -6.12%) and Microsoft (MSFT 352.83, -12.63, -3.46%) were among the weakest Dow components after both companies announced price increases tied to rising memory costs, while Amazon (AMZN 227.01, -7.26, -3.10%) and Alphabet (GOOG 342.19, -2.85, -0.83%) also finished lower.

As a result, the information technology (-0.1%), consumer discretionary (-1.8%), and communication services (-1.0%) sectors all lagged despite the strength across semiconductor stocks. The Vanguard Mega Cap Growth ETF declined 1.0%.

Away from mega-cap technology, the market continued to broaden. Six S&P 500 sectors finished higher, reinforcing the recent rotation into other areas of the market rather than away from equities altogether.

The industrials sector (+2.2%) captured the widest gain, with Caterpillar (CAT 1056.83, +62.38, +6.27%) notching all-time highs and finishing as the best-performing Dow component amid another strong session for industrial machinery names.

The health care sector (+1.5%) also outperformed, led by Bio-Techne (TECH 70.67, +11.80, +20.03%), which surged after agreeing to be acquired by Merck KGaA (MKKGY 33.59, +1.74, +5.46%) for $73 per share in cash.

The materials sector (+1.4%) benefited from strength across fertilizer and metals producers, while the energy sector (+1.0%) rebounded alongside crude oil after yesterday's retreat.

The S&P 500 Equal Weight Index (+0.6%) outperformed its market-weighted counterpart once again.

Outside the S&P 500, the Russell 2000 (+0.7%) and S&P Mid Cap 400 (+0.9%) also finished higher.

Overall, today's session continued to reinforce the market's evolving leadership. While elevated volatility persists across mega-cap technology stocks, strength has steadily broadened beneath the surface, with the DJIA's year-to-date gain (+8.0%) now surpassing that of the S&P 500 (+7.5%) as investors continue rotating within the equity market rather than exiting it. The contrasting reactions to Micron's earnings also underscored how the AI trade is becoming increasingly nuanced, with surging memory demand benefiting suppliers while simultaneously creating cost pressures for some of the market's largest technology customers.

U.S. Treasuries of most tenors recorded their third consecutive day of gains while the long bond underperformed, ending with a slight loss. The 2-year note yield settled down two basis points to 4.12%, and the 10-year note yield settled down one basis point to 4.39%. 

Reviewing today's data:

• May Personal Income 0.7% (Briefing.com consensus 0.3%); Prior 0.0%, May Personal Spending 0.7% (Briefing.com consensus 0.3%); Prior was revised to 0.4% from 0.5%, May PCE Prices 0.4% (Briefing.com consensus 0.4%); Prior 0.4%, May PCE Prices - Core 0.3% (Briefing.com consensus 0.3%); Prior was revised to 0.3% from 0.2%
  • The key takeaway from the report is that, first, there weren't any headline shocks for the PCE price indexes. They were in line with expectations, allowing participants to assume that next month's readings will look better given the sharp decline in oil prices. Secondly, real PCE was up 0.3% month-over-month, demonstrating that spending was driven by increased demand and not just higher prices. This will be a nice input for Q2 GDP forecasts.
• Q1 GDP - Third Estimate 2.1% (Briefing.com consensus 1.6%); Prior 1.6%, Q1 GDP Deflator - Third Estimate 3.6% (Briefing.com consensus 3.5%); Prior 3.5%
  • The key takeaway from the report is that Q1 GDP was stronger than originally thought, due primarily to a downward revision to imports, which are a subtraction in GDP calculations.
• May Durable Orders -4.5% (Briefing.com consensus -3.2%); Prior was revised to 8.5% from 7.9%, May Durable Goods 0 ex transportation 1.3% (Briefing.com consensus 0.5%); Prior was revised to 1.4% from 1.1%
  • The key takeaway from the report is that there was a healthy pickup in business spending in May, evidenced by the 1.6% increase in new orders for nondefense capital goods excluding aircraft.
• Weekly Initial Claims 215K (Briefing.com consensus 225K); Prior was revised to 227K from 226K, Weekly Continuing Claims 1.821 mln; Prior was revised to 1.800 mln from 1.810 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.

Friday:

The major averages finished little changed today as strength across software and several other pockets of the market helped offset another sharp pullback in semiconductor stocks. The S&P 500 (-0.1%), Nasdaq Composite (-0.2%), and DJIA (-0.1%) all ended with modest losses, reflecting a market that remained selective rather than broadly risk-averse.

Technology was once again defined by a notable divergence beneath the surface. Chipmakers came under renewed pressure after The New York Times reported that OpenAI may delay its planned IPO until 2027 following SpaceX's (SPCX 153.23, +0.23, +0.15%) disappointing post-IPO performance, prompting investors to continue reducing exposure to AI infrastructure names.

The PHLX Semiconductor Index fell 5.3%, with memory names such as Sandisk (SNDK 2090.71, -244.29, -10.46%) giving back a portion of yesterday's post-Micron (MU 1132.33, -81.23, -6.69%) earnings gains. Company-specific developments added to the weakness. onsemi (ON 90.65, -28.09, -23.66%) was the S&P 500's biggest laggard after announcing a $7 billion all-stock acquisition of Synaptics (SYNA 121.00, -4.62, -3.68%), as investors weighed the strategic merits of the transaction against the near-term dilution associated with an all-stock deal.

Despite the pressure on chipmakers, the broader technology complex delivered a much more mixed performance. Software stocks emerged as a notable area of strength, with ServiceNow (NOW 98.34, +8.82, +9.85%) surging 9.0% and helping lift the iShares Expanded Tech-Software Sector ETF (IGV) 4.1% higher.

Apple (AAPL 283.78, +8.63, +3.14%) and Microsoft (MSFT 372.97, +20.14, +5.71%) also rebounded from yesterday's declines, leaving the Vanguard Mega Cap Growth ETF flat for the day even as the information technology sector (-1.1%) finished as one of the weakest S&P 500 sectors.

The industrials sector (-1.5%) also lagged as electrical equipment names continued to trade in sympathy with semiconductor stocks. FedEx Freight (FDXF 153.89, -4.64, -2.93%) added to the weakness after investors responded cautiously to the company's first earnings report as a standalone company.

Away from technology, market participation remained constructive. Six S&P 500 sectors finished higher, led by the health care sector (+3.2%), where Eli Lilly (LLY 1206.50, +78.82, +6.99%) traded sharply higher and Moderna (MRNA 67.27, +7.52, +12.59%) finished as the top-performing S&P 500 component after unveiling research and early development updates during its Science Day event.

The defensive consumer staples sector (+1.0%) and utilities sector (+0.8%) also emphasized strength across more defensive sectors, while gains across several large consumer names helped the consumer discretionary sector (+1.6%) finish among the session's leaders.

Outside the S&P 500, the Russell 2000 (+0.1%) and S&P Mid Cap 400 (-0.2%) also finished little changed, indicating that rotational buying was somewhat less pronounced than in recent sessions.

On the policy front, Minneapolis Fed President Kashkari, a voting member of the FOMC, told CNBC that he currently has one rate hike penciled in for 2026, though he emphasized that future policy decisions will remain dependent on incoming economic data.

Overall, today's session reinforced that investors continue to distinguish between individual areas of technology rather than treating the sector as a single trade. While AI infrastructure names remained under pressure, resilience across software, select mega-cap technology stocks, and several non-technology sectors helped keep the broader market stable.

U.S. Treasuries had a mixed finish to the week, as 10s and shorter tenors recorded their fourth day of gains in a row while the long bond underperformed, finishing with a slim loss. The 2-year note yield settled down three basis points (-9 basis points this week), and the 10-year note yield settled down two basis points to 4.37% (-8 basis points this week).

Reviewing today's data:

• May Adv. Intl. Trade in Goods -$105.8 bln; Prior was revised to -$83.0 bln from -$82.4 bln
• May Adv. Retail Inventories 0.6%; Prior 0.7%
• May Adv. Wholesale Inventories 0.3%; Prior was revised to 0.7% from 0.5%
• June Univ. of Michigan Consumer Sentiment - Final 49.5 (Briefing.com consensus 48.9); Prior 48.9
  • The key takeaway from the report is that sentiment was boosted by the moderation in gas prices; however, the higher cost of living in general remains a burden, as sentiment is still 13% below the level it stood at in February prior to the start of the Iran War and almost 20% less than the prior year period.