The Dow Jones Industrial Average advanced on Thursday, gaining 291.82 points, or 0.56%, to close at 52,597.06, even as a sharp selloff in artificial intelligence and semiconductor stocks dragged the broader market lower. The S&P 500 slipped 32.26 points, or 0.44%, to 7,450.97, while the Nasdaq Composite fell 309.35 points, or 1.19%, to 25,730.69. The Philadelphia semiconductor index tumbled 6.7%, underscoring the pressure on tech-heavy indices.
Despite the headline losses, market breadth told a different story. Barron's reported that 320 S&P 500 stocks ended the session in positive territory, even as the benchmark index declined. This divergence highlights the outsized influence of a handful of mega-cap AI and semiconductor names, which pulled the index lower even as most stocks advanced. For index fund investors, the day served as a reminder that concentrated exposure to a few large tech stocks can mask broader market strength.
Labor Market Data Eases Rate Hike Fears
The U.S. Labor Department reported that nonfarm payrolls increased by 57,000 in June, well below the 110,000 forecast from Reuters. The unemployment rate ticked up to 4.2%, while the labor-force participation rate slipped to 61.5%, its lowest level since March 2021. Revisions to April and May payrolls subtracted a combined 74,000 jobs. Average hourly earnings rose 3.5% year-over-year, still a factor in inflation concerns.
Leisure and hospitality payrolls dropped by 61,000, the largest decline since the pandemic, signaling potential pullback among lower-income consumers. Sung Won Sohn, finance and economics professor at Loyola Marymount University, told Reuters that "lower-income consumers may be pulling back." The data tempered immediate rate hike worries, with futures pricing roughly a 50/50 chance of a Federal Reserve hike by September, according to Reuters. Adam Sarhan, CEO at 50 Park Investments, noted the report gave traders "room to breathe a sigh of relief."
AI and Chip Stocks Under Pressure
Meta Platforms META slid over 4%, contributing to the tech selloff. Reuters reported that Meta is launching a cloud unit to sell excess AI computing power, raising questions about the profitability of heavy AI investments. Nvidia NVDA dropped 2.2%, Micron Technology MU lost 5.8%, and Lam Research LRCX fell 11.4%, according to the Associated Press. The Philadelphia semiconductor index's 6.7% decline underscored the broad weakness in chip stocks.
Tesla Deliveries Miss the Mark
Tesla TSLA dropped 7.8% despite reporting record second-quarter deliveries of 480,126 vehicles, topping the Visible Alpha estimate of 402,776. Production reached 451,758 units, and deliveries outpaced production by 28,000, suggesting an inventory drawdown after a soft first quarter. The automaker said it expects capital spending to exceed $25 billion in 2026, nearly three times last year's $8.5 billion, to support AI infrastructure, battery output, Cybercab production, and the Optimus robot. David Wagner, head of equity at Aptus Capital Advisors, told Reuters that "big money is still waiting" for real progress on robotaxis and self-driving technology.
Other Market Movers
National Beverage FIZZ jumped 8.4% after announcing a special cash dividend of $3.25 per share, payable July 30 to holders of record July 13. Dollar Tree DLTR climbed 2.1% after its board refreshed its buyback plan to $2.5 billion, with CEO Michel C. Creedon Jr. calling it part of "disciplined capital allocation." Bending Spoons BSP, which owns Vimeo, slipped 13.7% after surging 40% on its Nasdaq debut.
Market Breadth and Holiday Closure
On the New York Stock Exchange, advancers led decliners by a 1.12-to-1 ratio, while on Nasdaq, decliners outpaced advancers 1.32-to-1. U.S. cash equity markets are closed Friday for the Independence Day holiday, with normal trading resuming Monday at 9:30 a.m. Eastern.
