Chip Stock Rally Boosts the Broader Market

The S&P 500 Index ($SPX) (SPY) today is up +0.60%, the Dow Jones Industrial Average ($DOWI) (DIA) is down -0.08%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.52%.  September E-mini S&P futures (ESU26) are up +0.63%, and September E-mini Nasdaq futures (NQU26) are up +1.56%. 

Stock indexes are moving higher today, led by strength in chipmakers and AI infrastructure stocks.  Stocks also found support on today’s US economic news, which showed service sector activity continued to expand in June, albeit at a slower pace, as companies boosted payrolls amid easing cost pressures.

The US Jun ISM services index fell -0.5 to 54.0, right on expectations. The Jun ISM services price-paid sub-index eased to 67.7 from 71.3 in May, stronger than the 67.5 expected. The Jun ISM services employment sub-index rose +3.3 to 51.2, stronger than expectations of 48.2.

Stocks and bonds also have carryover support from last Thursday’s smaller-than-expected increase in US nonfarm payrolls, which bolstered speculation that the Fed will not raise interest rates anytime soon.

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) erased early losses today and is up +0.2% as short-covering emerged after the crude crack spread soared to a 4-year high.  Crude oil prices were initially under pressure today as Saudi Arabia and the United Arab Emirates ramped up shipments to nearly pre-war levels.  Also, OPEC+ on Sunday agreed to add 188,000 bpd to their output target, beginning August 1, in line with plans to complete the reversal of production curbs imposed a few years ago.

The markets are discounting a 24% chance of a +25 bp rate hike at the next FOMC meeting on July 28-29.

Overseas stock markets are moving lower today.  The Euro Stoxx 50 fell from a new record high and is down -0.43%.  China's Shanghai Composite closed down -0.06%.  Japan's Nikkei-225 Stock Average closed down -0.01%.

Interest Rates

September 10-year T-notes (ZNU6) are down -2 ticks, and the 10-year T-note yield is up +0.6 bp to 4.489%.  Sep T-notes gave up an early advance today and turned lower after the June ISM Services index expanded as expected, with the employment sub-index climbing, a hawkish factor for Fed policy.  Supply pressures are also weighing on T-notes as the Treasury will auction $119 billion T-notes and T-bonds this week, beginning with a $58 billion auction of 3-year T-notes on Tuesday.

European government bond yields are moving higher today.  The 10-year German bund yield climbed to a 2-week high of 2.945% and is up +0.7 bp to 2.942%.  The 10-year UK gilt yield is up +0.9 bp to 4.791%.

Eurozone May retail sales rose +0.2% m/m, weaker than expectations of +0.3% m/m.

The Eurozone July Sentix investor confidence index rose by +10.3 to a 4-month high of -3.1, stronger than expectations of -10.0.

German May factory orders rose +1.9% m/m, stronger than expectations of +1.1% m/m.

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

US Stock Movers

Chipmakers and AI infrastructure stocks are climbing today, helping lift the overall market.  The iShares Semiconductor ETF (SOXX) is up more than +3%.  Advanced Micro Devices (AMD) and Western Digital (WDC) are up more than +9%, and Seagate Technology Holdings Plc (STX) and ON Semiconductor (ON) are up more than +6%.  Also, Microchip Technology (MCHP) and Qualcomm (QCOM) are up more than +5%, and Analog Devices (ADI), Intel (INTC), ARM Holdings Plc (ARM), NXP Semiconductors NV (NXPI), Broadcom (AVGO), ASML Holding NV (ASML), and Marvell Technology (MRVL) are up more than +4%.  In addition, Texas Instruments (TXN), SanDisk (SNDK), and Micron Technology (MU) are up more than +3%, and Lam Research (LRCX) is up more than +2%. 

Cybersecurity stocks are rallying today, a positive factor for the overall market.  CrowdStrike Holdings (CRWD) is up more than +5%, and Palo Alto Networks (PANW) is up more than +4%.  Also, Okta (OKTA) and Fortinet (FTNT) are up more than +3%, and Zscaler (ZS) and Cloudflare (NET) are up more than +1%. 

Dell Technologies (DELL) is up more than +8% after President Trump posted positive comments about the company on social media.

Macy’s (M) is up more than +2% after Morgan Stanley upgraded the stock to overweight with a price target of $30.

US Bancorp (USB) is up more than +2% after Jeffries upgraded the stock to buy from hold with a price target of $75.

Murphy USA (MUSA) is up more than +1% after Goldman Sachs upgraded the stock to neutral from sell.

Constellation Brands (STZ) is down more than -5% after Morgan Stanley said it sees potential Q3 demand risk for beer sales following Brazil’s and Mexico’s defeat in the World Cup on Sunday.

ZIM Integrated Shipping Services Ltd (ZIM) is down more than -5% after Ynet reported that Israeli Prime Minister Netanyahu said the proposed sale of the company is “not on the agenda.” 

Brown & Brown (BRO) is down more than -2% after Morgan Stanley downgraded the stock to underweight from equal weight with a price target of $55.

JB Hunt Transport Services (JBHT) is down more than -1% after Morgan Stanley downgraded the stock to underweight from equal weight with a price target of $200. 

Earnings Reports(7/6/2026)

None.