U.S. equity markets were closed Friday for the Independence Day holiday, leaving Thursday's closing levels as the final figures for the shortened week. The Dow Jones Industrial Average (INDEXDJX:.DJI) surged to a record finish of 52,900.07, gaining 594.83 points, or 1.14%. In contrast, the Nasdaq Composite (INDEXNASDAQ:.IXIC) dropped 0.80%, and the Philadelphia SE Semiconductor Index (INDEXNASDAQ:SOX) plunged 5.44% to 12,626.22.
The Dow's advance was broad-based, with 25 of its 30 components closing higher. The median gain among Dow stocks was approximately 2.1%. Leading the rally were Apple Inc. (NASDAQ:AAPL), up 4.84% after reports that the company is developing five new iPhone models; McDonald's Corp. (NYSE:MCD), which rose 4.16%; Walt Disney Co. (NYSE:DIS), gaining 3.96%; and Honeywell International Inc. (NASDAQ:HON), up 3.66%. On the downside, Cisco Systems Inc. (NASDAQ:CSCO) fell 3.69%, Caterpillar Inc. (NYSE:CAT) dropped 2.81%, Nvidia Corp. (NASDAQ:NVDA) slipped 1.39%, and Alphabet Inc. (NASDAQ:GOOGL) edged down 0.36%.
The divergence between the Dow and the Nasdaq reflects a rotation into defensive, blue-chip stocks, while technology and semiconductor names faced selling pressure. The semiconductor index's 5.44% decline was led by SanDisk Corp. (NASDAQ:SNDK), which tumbled 14.1%. Nvidia's modest decline added to the sector's weakness. Market breadth on the Nasdaq turned negative, with decliners outpacing advancers by a ratio of 1.05 to 1, while the NYSE saw advancers lead decliners by 1.42 to 1.
The Dow's record close was supported by a softer-than-expected labor market report. U.S. payrolls rose by just 57,000 in June, while the unemployment rate held at 4.2% and the labor force participation rate slipped to 61.5%. Revisions to April and May payrolls subtracted a combined 74,000 jobs. Leisure and hospitality employment fell by 61,000. Adam Sarhan, CEO of 50 Park Investments, noted that the report "doesn't mean the fear of inflation is over," but it "takes the pressure off the Fed" in the near term.
Bruce Zaro of Granite Wealth Management suggested that chip investors were likely "taking profits" after a strong run, which contributed to the semiconductor selloff. Tesla Inc. (NASDAQ:TSLA) shares dropped 7.5% despite second-quarter deliveries exceeding forecasts, indicating that even strong results face high expectations in the current market environment.
For the holiday-shortened week, the Dow advanced approximately 2%, marking its fourth consecutive weekly gain—the longest such streak since October 2024. The S&P 500 (INDEXSP:.INX) rose about 1.8%, and the Nasdaq Composite added roughly 2.1%, despite Thursday's chip-driven pullback.
Looking ahead, next week brings the release of the Federal Reserve's minutes from the June meeting, the first under Chair Kevin Warsh. Investors will scrutinize the minutes for any shift in the tone regarding interest rate hikes. Joe Mazzola, head trading and derivatives strategist at Charles Schwab Corp. (NYSE:SCHW), said he's watching whether the broadening market trend continues. Matthew Miskin of Manulife Financial Corp.'s (NYSE:MFC) John Hancock Investments noted that the minutes should reveal "how incrementally hawkish are they leaning."
Early earnings season also kicks off next week, with Delta Air Lines Inc. (NYSE:DAL) and PepsiCo Inc. (NASDAQ:PEP) reporting. Delta's results will provide insight into travel demand and ticket pricing, while PepsiCo's report could set the tone for consumer staples pricing. The broader Q2 earnings season is projected to show S&P 500 profits growing more than 24% year-over-year, according to LSEG IBES. Keith Lerner, chief investment officer at Truist Financial Corp. (NYSE:TFC), emphasized that earnings must "validate the earnings trajectory" to sustain the market's momentum, especially if the Fed remains hawkish and chip stocks continue to face headwinds.
