U.S. stock markets posted modest gains Monday morning, but the advance was far from broad-based. While major indices like the S&P 500 and Nasdaq advanced, small-cap stocks—represented by the Russell 2000—fell more than 1%, highlighting a market that remains heavily reliant on a handful of large-cap names.
Megacap ETFs significantly outperformed, while semiconductor ETFs declined, leaving the artificial intelligence trade divided. The divergence between the S&P 500 and Russell 2000 proxies was roughly 2.14 percentage points, suggesting the rebound was not a simple risk-on move. Investors favored a select group of big names while remaining cautious on smaller, more cyclical stocks.
In a notable corporate development, Comcast (NASDAQ:CMCSA) shares surged over 9% after announcing plans to spin off NBCUniversal and Sky into a new, tax-free company. The transaction is expected to close in about a year. Mike Cavanagh will lead NBCUniversal, while former CFO Michael Angelakis will become Comcast's CEO. Brian Roberts, Comcast's chairman, said the deal will “unlock a more entrepreneurial management approach.” Ross Benes, a senior analyst at eMarketer, told Reuters that “NBCU will become M&A target eventually,” though Comcast executives downplayed any immediate dealmaking.
Among megacaps, Alphabet (NASDAQ:GOOGL) rose 3.51%, Amazon (NASDAQ:AMZN) added 5.39%, and Nvidia (NASDAQ:NVDA) gained 0.69%. Apple (NASDAQ:AAPL) bucked the trend, falling 0.63%. The mixed performance kept the AI trade choppy rather than widespread. Goldman Sachs analyst Kamakshya Trivedi noted that AI has become the “primary source of volatility in equity markets,” while Jake Dollarhide of Longbow Asset Management observed, “AI is working for the providers. It is not working for the spenders.”
Space Exploration Technologies (NASDAQ:SPCX) edged up 0.65% after Nasdaq announced that SpaceX will join the Nasdaq-100 index before markets open on July 7. Nasdaq said more than 200 investment products with over $800 billion in assets globally track the index.
Viridian Therapeutics (NASDAQ:VRDN) received FDA approval for Lumvoa in thyroid eye disease, marking the company's first FDA-approved drug. The company said it is launching Lumvoa immediately, providing a new catalyst for the stock.
The narrow market rally is also facing a funding issue. Primary dealers hold over $220 billion in equity repo exposure, according to Reuters. U.S.-domiciled leveraged ETF assets jumped to about $200 billion in Q1, nearly double the prior period. Morgan Stanley’s Martin Tobias described equity funding as the “canary in the coal mine,” warning that concentrated financing can amplify risks if the rally remains narrow.
Markets face a shortened trading week due to the Independence Day holiday, with June payrolls data due on Thursday. Guy LeBas, chief fixed income strategist at Janney Montgomery Scott, told Reuters that consumer spending shows “upside risk” for U.S. growth, adding to the uncertainty around the Federal Reserve’s next moves.
