Wall Street closed mixed to complete a holiday-shortened week. The Dow jumped significantly to set new highs. Weak jobs data for June raised hope that the Fed may not hike the benchmark interest rate anytime soon.
However, the Nasdaq Composite fell sharply due to profit booking on highly overvalued artificial intelligence (AI) stocks. The S&P 500 remained almost unchanged. For the last week, these indexes ended in positive territory. U.S. markets were closed on Friday to observe Independence Day.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) jumped 1.1% or 594.83 points to close at a record-high 52,900.07. Notably, 25 components of the 30-stock index ended in positive territory while five ended in the red. In intraday trade, the blue-chip index touched an all-time high of 52,903.85.
The tech-heavy Nasdaq Composite finished at 25,832.67, sliding 0.8% or 207.36 points on weak performance by AI semiconductor giants. The S&P 500 rose marginally by 0.01 point to finish at 7,483.24. Seven out of 11 sectors of the broad-market index ended in positive territory while four finished in negative territory.
The Communication Services Select Sector SPDR (XLC) and the Financials Select Sector SPDR (XLF) advanced 2.4% and 2.2%, respectively. On the other hand, the Information Technology Select Sector SPDR (XLK), the Utilities Select Sector SPDR (XLU) and the Industrials Select Sector SPDR (XLI) tumbled 2.6%, 1.3% and 1%, respectively.
The fear gauge CBOE Volatility Index (VIX) fell 1.1% to 15.97. A total of 19.92 billion shares were traded on Thursday, lower than the last 20-session average of 23.34 billion. Advancers outnumbered decliners on the NYSE by a 1.42-to-1 ratio. On the Nasdaq, a 1.05-to-1 ratio favored declining issues.
Weak Jobs Data for June
The Department of Labor reported that the nonfarm payrolls for June came in at 57,000, well below the Zacks Consensus Estimate of 117,000. The metric for May was revised downward by 43,000 to 129,000. Similarly, the data for April was revised downward by 31,000 to 148,000.
Unemployment rate came in at 4.2% in June compared with the Zacks Consensus Estimate and May’s metric of 4.3%. The real unemployment rate (including discouraged workers and those holding part-time jobs for economic reasons) fell 0.2% sequentially to 7.9%. The decline in the unemployment rate is primarily due to a 0.3% fall in the labor force participation rate to 61.5%, marking the lowest level since March 2021.
The hourly average wage rate remained the same sequentially at 0.3%, in line with the Zacks Consensus Estimate. Year over year, the metric increased 3.5% in June, in line with the consensus mark. Average workweek also remained flat sequentially at 34.3 in June.
AI Chip Stocks Plummet
AI semiconductor stocks continued their downturn for the second day in a row. Market participants remained concerned about whether shares of these companies, which are currently highly overstretched valued, should continue their northbound journey.
Consequently, stock prices of Micron Technology Inc. MU, Advanced Micro Devices Inc. AMD and Intel Corp. INTC tumbled 5.5%, 4.3% and 5.3%, respectively. Micron currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Economic Data
The Department of Labor reported that initial claims decreased by 1,000 to 215,000 for the week ended June 27, below the Zacks Consensus Estimate of 221,000. The previous week’s data was revised upward by 1,000 to 216,000.
Continuing claims (those who have already received government aid and reported a week behind) increased 2,000 to 1.814 million for the week ended June 20. The previous week's level was revised downward by 9,000 to 1,812,000 from 1,821,000 reported earlier.
The U.S. Census Bureau reported that new orders for manufactured goods (factory orders) for May fell 1.3% month over month lower than the Zacks Consensus Estimate of a monthly decline of 1.7%. The metric for April was revised upward to 5.3% from 4.8% reported earlier.
The new orders for manufactured durable goods decreased 4.5% in May while new orders for manufactured nondurable goods increased 2.2%. Shipment of manufactured durable goods increased 1% and shipment of manufactured nondurable goods increased 2.2% in May.
Weekly Roundup
Last week was impressive for Wall Street. The Dow, the S&P 500 and the Nasdaq Composite rallied 2%, 1.8% and 2.1%, respectively. A strong U.S. economy and expectations of a solid second-quarter 2026 earnings results bolstered market participants confidence in risky assets like equities.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.
Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Intel Corporation (INTC): Free Stock Analysis Report
Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report
Micron Technology, Inc. (MU): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).