The S&P 500 Index ($SPX) (SPY) closed unchanged on Thursday, the Dow Jones Industrial Average ($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 (NQ26) fell -1.82%.
Stock indexes lost early gains on Thursday and closed mixed, with the S&P 500 hitting a 2-week high and the Dow Jones Industrial Average hitting a new all-time high. Chipmakers sold off for a second day Thursday, weighing on the broader market and sending 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 declines in SK Hynix and Samsung Electronics on renewed doubts over the sustainability of the AI buildout boom. Chipmakers also suffered some negative impact from Wednesday, when Meta Platform said it planned to sell computing power, raising questions about excess AI capacity.
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Stocks opened higher on Thursday and got support after a slower-than-expected increase in US non-farm payrolls boosted speculation that the Fed would be unable to raise interest rates any time soon. The pace of US hiring slowed sharply in June and was revised downwards in May, while the unemployment rate fell to a one-year low. Additionally, a smaller-than-expected decline in the May factory orders report was supportive for the stock.
US non-farm payrolls rose by +57,000 in June, below expectations of +113,000, and non-farm payrolls in May were reduced to +129,000 from the originally reported +172,000. The unemployment rate unexpectedly fell -0.1 to a one-year low of 4.2% in June, indicating a stronger-than-expected labor market with no change at 4.3%.
US average hourly earnings rose +0.3% m/m and +3.5% y/y in January, which was in line with expectations.
US weekly initial unemployment claims unexpectedly fell by -1,000 to 215,000, reflecting a stronger-than-expected labor market increase of 218,000.
US factory orders declined by -1.3% m/m in May, which was a smaller than expected decline of -2.0% m/m. Additionally, factory pre-shipment orders increased by +1.9% m/m in May, stronger than expectations of +1.0% m/m and the largest increase in more than 4 years.
The strong Q2 earnings outlook is a bullish factor for stocks. Forecasts compiled by Bloomberg Intelligence suggest second-quarter earnings could rise 23%, close to the first quarter’s explosive 30% gain, which was more than double the 12% analysts were expecting. With AI spending expected to account for the majority of earnings, AI infrastructure stocks are set to contribute nearly 60% of the S&P 500’s earnings per share growth in the second quarter.
WTI crude oil (CLQ26) fell to a 4.25-month low on Thursday as global supplies increased. The United Arab Emirates increased shipments of crude oil and condensate by 30% to more than 3.9 million bpd in June, restoring its oil exports to pre-war levels. Also, a US official said commercial shipping through the Strait of Hormuz has increased over the past few weeks, with US military support helping to increase oil flows to more than 10 million bpd.
Markets are discounting an 18% chance of a +25 bp rate hike at the next FOMC meeting on July 28-29.
Foreign stock markets closed with gains on Thursday. The Euro Stoxx 50 hit a new record high and closed up +1.24%. China’s Shanghai Composite climbed to a 1-week high and closed +0.4% higher. Japan’s Nikkei-225 stock average closed +0.59% higher.
interest rates
September 10-year T-notes (ZNU6) were unchanged on Thursday, and the 10-year T-note yield fell -0.2bp to 4.477%. September T-notes bounced off 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 early losses on Thursday amid signs of a slowdown in the US labor market after June non-farm payrolls rose less than expected and May non-farm payrolls were revised lower. T-notes also got support as WTI crude oil fell to a 4.25-month low on Thursday, which dampened inflation expectations.
European government bond yields rose on Thursday. 10-year German Bund yields rose to a 1-week high of 2.929% and ended +2.6bp at 2.904%. 10-year UK gilt yields rose +1.9bp to 4.776%.
Italy’s unemployment rate in May unexpectedly fell by -0.1 to a record low of 5.0% (data from 2004), reflecting a stronger-than-expected labor market with no change at 5.1%.
BoE Governor Andrew Bailey said cutting interest rates was “not on the table at the moment” because households had not yet felt the full impact of the Iran war.
The swaps are discounting a +25% probability of a +4bp 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 declines in the S&P 500 and Nasdaq 100, and KLA Corp (KLAC) closed down more than -12%. Additionally, Marvell Technology (MRVL) closed down more than -11%, and Lam Research (LRCX) and Seagate Technology Holdings PLC (STX) closed down more than -10%. Additionally, Western Digital (WDC) closed down over -9%, Applied Materials (AMAT) closed down over -8%, and ARM Holdings PLC (ARM) closed down over -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 the second consecutive day on Thursday, which is 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. Additionally, 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. Additionally, Microsoft (MSFT) and Salesforce (CRM) closed up more than +1%.
Mining stocks rose on Thursday amid rise 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 more than -9% after announcing plans to offer a mixed shelf of debt securities, although the size of the offering was not disclosed.
Tesla (TSLA) closed down more than -7% as the company’s second-quarter deliveries beat expectations but failed to impress investors.
Genuine Parts (GPC) was among the gainers in the S&P 500, up more than +12% on reports that O’Reilly Automotive made a bid for the company.
AeroVironment (AVAV) closed up more than +10% after being awarded a US Army contract worth up to $500 million to procure commercial unmanned aerial systems and combat small-unmanned aerial systems capabilities.
Apple (AAPL) closed up more than 4% on 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 from $115 to $130.
Income Report(7/6/2026)
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On the date of publication, Rich Asplund did not have (directly or indirectly) any positions in any securities mentioned in this article. All information and data in this article is for informational purposes only. Please see the Barchart Disclosure Policy here for more information.
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