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Weekly Performance
- S&P 500: +1.8%
- Nasdaq Composite: +2.1%
- Dow Jones Industrial Average: +2.0% (closed at another record high)
What Drove Markets This Week?
Despite a holiday-shortened trading week, U.S. equities posted solid gains as investors became more confident that the Federal Reserve may remain patient following a softer-than-expected June employment report.
The biggest catalyst was Thursday’s June Nonfarm Payrolls report, which showed just 57,000 jobs added, well below expectations, while prior months were revised lower. The weaker labor data eased concerns that the Fed would need to tighten policy further, pushing Treasury yields lower and improving investor sentiment toward equities.
Markets also experienced a notable rotation beneath the surface. Financials, healthcare, industrials and other value-oriented sectors outperformed, while semiconductor and AI infrastructure stocks experienced significant profit-taking after an extended rally. Although the Nasdaq still finished higher for the week, technology leadership narrowed considerably.
Corporate earnings remained largely absent ahead of the official start of second-quarter reporting season, leaving macroeconomic data and interest-rate expectations as the dominant drivers of market performance. Investors also continued to monitor global trade developments and geopolitical headlines, though these played a secondary role relative to the labor market data and Fed outlook.
Federal Reserve
The softer employment data reduced expectations for another near-term interest rate increase and reinforced the view that policymakers can afford to wait for additional inflation and labor market evidence before making further policy decisions. Markets now shift their focus toward the release of the June FOMC meeting minutes, which may provide additional insight into policymakers’ views on inflation and future rate decisions.
What to Watch Next Week (July 6–10)
Markets return from the holiday with a lighter economic calendar but several events could influence sentiment:
- Monday: ISM Services PMI (June) – key measure of U.S. service-sector activity.
- Wednesday: Release of the Federal Reserve June meeting minutes, providing additional insight into monetary policy discussions.
- Thursday: Weekly Initial Jobless Claims and PepsiCo begins the earnings calendar.
- Friday: Delta Air Lines reports earnings, offering one of the first reads on second-quarter corporate profitability and consumer travel demand.
Bottom Line
Bottom Line
Markets entered the second half of 2026 with renewed optimism as softer labor market data reduced immediate Federal Reserve tightening concerns. While major indices finished the week with strong gains, leadership broadened beyond mega-cap technology as investors rotated into more cyclical and defensive sectors. Attention now turns toward the Fed minutes and the unofficial start of second-quarter earnings season, which will likely determine whether equities can extend their recent advance.
