U.S. equity markets were mixed at midday on Wednesday, with the equal-weight S&P 500 index outperforming its cap-weighted counterpart by roughly 60 basis points. The divergence came as a disappointing ADP employment report and a sharp decline in semiconductor stocks pressured the tech-heavy Nasdaq, while broader market breadth remained positive.
At noon in New York, the Dow Jones Industrial Average was down 65.31 points, or 0.1%, to 52,262.87. The S&P 500 slipped 19.85 points, or 0.3%, to 7,479.82, while the Nasdaq Composite fell 141.90 points, or 0.5%, to 26,073.29. Despite the headline declines, market breadth was favorable, with advancers outpacing decliners 1.2-to-1 on the NYSE and 1.35-to-1 on the Nasdaq.
The SPDR S&P 500 ETF Trust (SPY) was up 0.3%, while the Invesco S&P 500 Equal Weight ETF (RSP) gained 0.9%, reflecting the broad-based strength outside of mega-cap tech. In contrast, the Invesco QQQ Trust (QQQ) fell 0.9%, and the VanEck Semiconductor ETF (SMH) slid 4.3%, underperforming as chip stocks led the decline. The iShares Russell 2000 ETF (IWM) also rose 0.6%, indicating that small caps participated in the rally.
Among key technology names, Meta Platforms (META) surged 9.9% to $619.03 following reports that the company is developing a cloud business to offer additional AI computing power. However, other AI-related stocks struggled: Nvidia (NVDA) dropped 1.5% to $197.11, and Broadcom (AVGO) fell 1.7% to $371.40. Apple (AAPL), Microsoft (MSFT), Amazon.com (AMZN), and Tesla (TSLA) all traded higher, suggesting the weakness did not extend across all mega-cap tech stocks.
The mixed action comes as investors digest a softer-than-expected jobs report. Automatic Data Processing (ADP) reported that private employers added just 98,000 jobs in June, below the 122,000 added in May and the 118,000 expected by economists in a Reuters poll. Separately, the Institute for Supply Management (ISM) said its manufacturing PMI fell to 53.3 from 54.0, missing the consensus call for no change. The prices paid component eased to 73.0 from 82.1, still elevated but providing some relief on inflation.
Federal Reserve Chair Kevin Warsh, speaking at the central bank forum in Sintra, Portugal, offered few signals on the path of interest rates. Warsh noted that inflation expectations and risks “have come down” but declined to provide forward guidance. According to Reuters, futures markets still priced in a 33% probability of a rate hike in July. Lauren van Biljon, a senior portfolio manager at Allspring Global Investments, suggested that weaker energy and slowing shelter inflation could keep the Fed on hold.
Outside the main indices, Shutterstock (SSTK) plunged 28.4% to $9.99 after scrapping its planned tie-up with Getty Images (GETY), which fell 7.0%. Kroger (KR) edged down 1.1% following news of its $1.65 billion agreement to acquire Giant Eagle. The second half of the year is seeing a shift in market leadership, with the equal-weight S&P 500 gaining ground as the AI trade remains choppy. Goldman Sachs (GS) expects consensus EPS growth of 22% year-over-year, with AI infrastructure names contributing nearly 60% of that growth.
