Stock Indexes Turn Mixed as Chipmakers Sink

The S&P 500 Index ($SPX) (SPY) is up +0.10% today, the Dow Jones Industrial Average ($DOWI) (DIA) is up +0.85%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.92%.  September E-mini S&P futures (ESU26) are up +0.08%, and September E-mini Nasdaq futures (NQU26) are down -1.03%. 

Stock indexes are mixed today, with the S&P 500 posting a 2-week high and the Dow Jones Industrials posting a new all-time high.  The broader market has support today after a slower-than-expected increase in US nonfarm payrolls knocked bond yields lower and bolstered speculation that the Fed will be unable to raise interest rates any time soon.  US hiring slowed sharply in June and was revised lower in May even as the unemployment rate fell to a 1-year low. 

However, stock gains are muted today, and the Nasdaq 100 is in negative territory amid weakness in chipmakers and AI-infrastructure stocks for a second session.  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.  The losses in South Korean chipmakers come amid negative carryover from Wednesday, when Meta Platforms said it plans to sell computing power, raising questions about excess AI capacity.

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) is down more than -1% today at a fresh 4.25-month low 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 a 20% chance of a +25 bp rate hike at the next FOMC meeting on July 28-29.

Overseas stock markets are moving higher today.  The Euro Stoxx 50 rallied to a new record high and is up +1.46%.  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) today are up +2 ticks, and the 10-year T-note yield is down -0.8 bp to 4.471%.  Sep T-notes rebounded from a 1-week low today and moved higher, and the 10-year T-note yield fell from a 1-week high of 4.501%. T-notes pushed higher today on 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 have support on today’s -1% fall in crude oil prices to a 4.25-month low, which lowers inflation expectations.

European government bond yields are moving higher today.  The 10-year German bund yield rose to a 1-week high of 2.929% and is up +2.7 bp to 2.905%.  The 10-year UK gilt yield is up +2.3 bp to 4.779%.

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 3% chance of a +25 bp ECB rate hike at its next policy meeting on July 23.

US Stock Movers

Software stocks are moving higher for a second day today, a positive factor for the overall market.  Palantir Technologies (PLTR) is up more than +3% after DA Davidson upgraded the stock to buy from neutral with a price target of $175, and Adobe (ADBE) is up more than +3% after HSBC upgraded the stock to buy from hold with a price target of $308.  Also, Autodesk (ADSK), Intuit (INTU), and Workday (WDAY) are up more than +2%.  In addition, Microsoft (MSFT) and Salesforce (CRM) are up more than +1%.

Mining stocks are rising today amid a surge in gold and silver prices.  Coeur Mining (CDE) is up more than +5%, and Hecla Mining (HL), Anglogold Ashanti (AU), and Barrick Mining (B) are up more than +4%.  Also, Newmont Corp (NEM) is up more than +3%, and Freeport McMoran (FCX) is up +0.25%.

Chipmakers and AI infrastructure stocks are sliding today for a second session, weighing on the broader market.  The iShares Semiconductor ETF (SOXX) is down more than -3%.  SanDisk (SNDK) is down more than -9% to lead losers in the S&P 500 and Nasdaq 100, and KLA Corp (KLAC) is down more than -7%.  Also, Lam Research (LRCX) and Applied Materials (AMAT) are down more than -6%, and Marvell Technology (MRVL) is down more than -5%.  In addition, Advanced Micro Devices (AMD) and Western Digital (WDC) are down more than -4%, and Microchip Technology (MCHP), Intel (INTC), Micron Technology (MU), and Qualcomm (QCOM) are down more than -2%. 

AeroVironment (AVAV) is up more than +9% 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.   

Robinhood Markets (HOOD) is up more than +6% after Mizuho Securities raised its price target on the stock to $130 from $115. 

Apple (AAPL) is 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.

Jabil Inc (JBL) is down more than -5% after announcing plans to offer a mixed shelf of debt securities, though the size of the offering was not mentioned. 

Earnings Reports(7/2/2026)

Lindsay Corp (LNN) and National Beverage Corp (FIZZ).