The Dow Jones Industrial Average climbed to a new record on Thursday as investors digested a softer-than-expected U.S. jobs report for June. The blue-chip benchmark added 594.83 points, or 1.14%, closing at 52,900.07 after reaching an intraday high of 52,903.85. The S&P 500 inched up less than a point to 7,483.24, while the Nasdaq Composite pulled back 0.8% to 25,832.67 amid fresh weakness in semiconductor names.
Labor market data for June showed employers added 57,000 jobs, well short of the 115,000 consensus forecast compiled by Dow Jones. The unemployment rate fell to 4.2%, compared with expectations it would remain at 4.3%.
All three major indexes posted solid gains for the holiday-shortened week: the S&P 500 rose 1.8%, while the Dow and Nasdaq each climbed close to 2%.
Market participants are now shifting attention to several key drivers that will shape near-term direction: how the Federal Reserve signals its policy path, the early flow of second-quarter corporate earnings, and a light calendar of economic releases that could nevertheless contain signals on inflation and activity.
Rate expectations have moved markedly this year - traders swung from anticipating cuts in January to increasingly pricing in potential hikes. That hawkish tilt strengthened after the Fed’s most recent meeting, which was the first under new Chair Kevin Warsh. At that meeting Warsh underscored the central bank’s commitment to price stability while inflation remains above the Fed’s 2% target. Minutes from that gathering are scheduled for release on Wednesday.
Warsh also indicated the Fed would discontinue forward guidance and stop providing explicit near-term signals about its intentions. That change in communication policy could increase the market significance of meeting minutes going forward. On Thursday, Fed funds futures suggested roughly even odds - about 50-50 - that the Fed will raise rates by the September meeting, according to LSEG data.
Economic releases are light next week, though upcoming services and manufacturing reports could shed further light on inflationary trends and activity levels.
Corporate earnings remain a pivotal factor supporting the market advance. Strong profits reported for the first quarter have helped underpin investor confidence and lifted expectations for the second-quarter reporting season, which accelerates later this month. S&P 500 companies are projected to report earnings growth of more than 24% for the quarter, according to LSEG data.
Analysts differ on how market leadership may evolve in the second half of the year and which sectors will contribute to the next leg of gains. Below are a selection of bank and asset manager views cited by market participants:
JPMorgan: "We stay with the view that AI is unlikely to be the only story in town in 2H, in contrast to 2025, and look for broadening in market participation, potentially catalysed by the fall in oil price to lower levels than consensus believes, and easing in the hawkish tilt by central banks, especially if inflation moves lower, as we expect. Having said that, we think that the latest weakness in SOX and in Korea will be used as an opportunity to add, as semis upcycle is not peaking anytime soon, meaningful supply is not likely to arrive before 2028, even as it remains cyclical. We stay fundamentally bearish on AI cannibalisation trades, with tactical bounces likely when the group gets oversold, as it was in March. Mag-7 is somewhere in between these two extremes, with earnings and valuation tailwind, but likely to see derating continuing on monetization fears."
MAPFRE Asset Management: “We expect a good second half of the year for the stock markets thanks to the reduction in geopolitical risk, which has reined in the stagflation scenario. There may be fluctuations, but it will be positive in terms of profitability. Although in a more tempered way than in previous quarters.”
Morgan Stanley: "This is simply the next rotation, in our view— Semis to the Hyperscalers and other broadening trades. Given the momentum unwind is happening in some of the larger companies in the index, it’s unlikely the major averages will trade well in the near term—i.e., the rotation continues in a choppy / weaker equity market overall."
Evercore: "History shows stocks breathe easier once oil exits the danger zone, solid gains led by Tech and Consumer names. The Subsiding Gusher reinforces the earnings-driven "AI Revolution" bull market has further to run, as cheaper energy eases recession risk and supports consumption. Energy EPS will suffer, but broad earnings growth remains strong. And despite chatter about froth, the signs of excess remain well short of Dot-Com-era extremes. The main risk lies not in stocks but in rates. A hawkish Warsh Fed, keen to reshape how the Fed measures and communicates, should keep volatility elevated through the Summer. Even so, Warsh hikes are unlikely to end the rally, with falling oil buying Warsh time and space."
From a market-structure perspective, the immediate picture is one of mixed strength: the Dow’s record close reflects breadth among blue-chip industrials, while the Nasdaq’s pullback signals caution in technology, particularly in semiconductors. The labor data - notably weaker payroll additions and a lower-than-expected unemployment rate - complicates the policy outlook and has briefly eased bets on near-term rate increases.
Looking ahead, investors will parse the Fed meeting minutes for any nuance in the new Fed chair’s approach to policy communication and will monitor early corporate reports for confirmation that earnings momentum can sustain the recent rally. Services and manufacturing releases due in coming days will also be watched for inflation cues.
For now, markets balance positive earnings prospects and a recent run of gains against the risk of renewed volatility should the Fed emphasize a more hawkish stance or incoming data shift the inflation trajectory.