Dow hits record high as weak jobs data eases Fed rate hike concerns

The Dow Jones Industrial Average climbed to a record high on Thursday after a weaker-than-expected US jobs report reduced expectations of near-term Federal Reserve interest rate hikes, while technology stocks and semiconductor shares extended their recent decline.

The 30-stock Dow rose 560 points, or 1.10%, to close at 52,865.24 after touching an all-time intraday high of 52,805.12.

The benchmark also recorded its fourth consecutive weekly gain, its longest winning streak since October 2024.

The S&P 500 slipped 0.06% to close at 7,478.66, while the Nasdaq Composite fell 0.87% to 25,813.75 as weakness in chipmakers weighed on technology stocks.

US markets will remain closed on Friday in observance of the Independence Day holiday.

Weak jobs report eases Fed rate hike expectations

Investor sentiment was supported by the June nonfarm payrolls report, which showed the US economy added 57,000 jobs, well below economists' expectations.

Reuters cited estimates of 110,000 jobs, while economists surveyed by Dow Jones had forecast 115,000 new jobs.

The unemployment rate came in at 4.2%, compared with expectations of 4.3%.

Following the report, the yield on the two-year US Treasury note declined as investors increased expectations that the Federal Reserve could delay further interest rate hikes.

Expectations for a September rate hike also eased, with CME FedWatch data showing the probability falling to 55% from 64.1%.

“As we are learning how the Fed reaction function will form under [Fed Chairman Kevin] Warsh, this print takes some of the pressure off of the inflation fighting institution to hike near term,” said Bradford Smith, portfolio manager at Janus Henderson Investors in a CNBC report.

“That said, Warsh commented at his first presser that jobs data only becomes meaningful after the third revision and by then becomes ‘echoes of history,’” he continued. “With oil price inflation moderating, some softness on the jobs front likely keeps the Fed on hold at least for the next meeting.”

Semiconductor selloff weighs on technology

Technology stocks remained under pressure as investors continued rotating out of semiconductor shares following the sector's strong gains earlier this year.

The VanEck Semiconductor ETF fell 5.2%, led by 13% declines in Teradyne and KLA. Nvidia lost 2.1%, while Micron Technology dropped 6%.

Tesla also declined despite reporting second-quarter deliveries that exceeded analyst expectations, while Bending Spoons fell a day after the Vimeo owner surged 40% during its Nasdaq debut.

Weekly gains remain intact despite market rotation

Despite Thursday's mixed performance, the major US indexes remained on track for solid gains during the holiday-shortened week.

The S&P 500 made a gain of more than 1.8%, while the Dow and Nasdaq advanced more than 1.7% and 2.4%, respectively.

Investors also monitored geopolitical developments after oil prices declined following comments from mediator Qatar indicating that Iran and the United States had made progress in talks aimed at ending the conflict in the Middle East, easing one source of inflation concern for financial markets.