Wall Street wrapped up the holiday-shortened week with a split personality. The Dow climbed 1.1% on Thursday to a fresh record at 52,899.24, powered by healthcare and financials. The S&P 500 was basically flat, losing 0.1% to 7,478.66. The Nasdaq dropped 0.8% to 25,832.67 as chip stocks continued their ugly unwind.

For the week, all three majors posted solid gains: S&P +1.7%, Nasdaq +2.1%, Dow +2%. Europe's STOXX index hit a record closing high. Hard to complain about that backdrop.

But the semiconductor story is worth dwelling on. After the Philadelphia Semiconductor Index put up its best quarter ever on Tuesday, with a frankly absurd 87.8% gain, it then fell more than 11% over Wednesday and Thursday. Micron dropped as much as 10.6% in a single session. Applied Materials, Lam Research, and Intel each shed over 9%.

Global equity indices — daily and 5-day returns with technical signals. Source: MPC Markets

JPMorgan's Nikolaos Panigirtzoglou flagged what a lot of people have been thinking: "The strong and almost steady outperformance since last September of semiconductor stocks vs. hyperscalers appears somewhat unsustainable in the long run."

Meta was the odd one out, rallying 8.8% after Bloomberg reported the company is building a cloud business to sell excess AI computing capacity. That is a significant pivot. If Meta starts monetising the infrastructure it has been spending $145 billion a year on, it changes the calculus for investors who have been nervous about the capex bill. It also puts Meta into direct competition with Amazon, Microsoft, Google, and CoreWeave.

Tesla fell on Thursday despite reporting record second-quarter deliveries that beat even the most bullish individual forecasts from Goldman Sachs and Barclays. The stock had already rallied 12% in the week leading into the report. Classic buy-the-rumour, sell-the-fact. Ross Gerber at Gerber Kawasaki put it bluntly: "Gas prices are back to normal, for Tesla that also means less demand moving forward. They make just three models and one is the non-selling Cybertruck."

Rivian was a different story, hiking its full-year delivery forecast as its lower-cost SUV starts shipping. OpenAI grabbed headlines too, with the FT reporting it has proposed giving the US government a 5% stake. The AI startup confidentially filed for an IPO last month.

This was the number that mattered all week, and it came in soft. The US added just 57,000 nonfarm payrolls in June, well below the 114,000 consensus. May was revised down by 43,000 to 129,000. Combined with April's downward revision, the prior two months came in 74,000 lower than previously reported.

Unemployment ticked down to 4.2% from 4.3%, but that came with a catch: labour force participation plunged to 61.5%, the lowest in more than five years. Prime-age participation dropped to 83.3%, matching its lowest since 2023. Some economists suspect the decline is a statistical quirk, but the headline is still ugly.

US hiring data: nonfarm payrolls, leisure & hospitality, unemployment rate, participation rate. Source: Bureau of Labor Statistics via Bloomberg

The leisure and hospitality sector lost 55,000 jobs, which is striking given the FIFA World Cup was underway and Independence Day was around the corner. Capital Economics flagged that decline specifically. Healthcare and social assistance continued to do the heavy lifting on the hiring side, with construction and manufacturing also adding jobs, likely boosted by the data-centre buildout.

Nonfarm payrolls: actual vs estimated and payrolls surprise. Source: LSEG Datastream / S. Culp

What does it mean for the Fed? Before the report, markets had priced in roughly 50.7% odds of a September rate hike. After the number, those odds fell and expectations shifted from one-to-two hikes this year to between zero and one. The 2-year yield dropped 4 basis points to 4.14%. The dollar slid against every developed-market currency.

Neil Dutta at Renaissance Macro summed up the picture: "The main story here is of a labor market that reflects the broader economy. Economic growth is uneven and thus, the labor market is too." That feels right. The three-month payrolls average sits at about 111,000, which is slowing but not falling apart. The report gives the Fed cover to sit tight through summer without reaching for the rate scissors.

Vital Knowledge's analysts noted that "the combination of relatively soft labor conditions and the sharp fall in oil should finally bring material yield relief to equities."

The first half of 2026 is in the books and the numbers are striking. A diversified portfolio of stocks, bonds, and commodities posted its strongest first-half return since 2021. This despite a war in the Middle East, an oil price that doubled before collapsing, and one of the sharpest swings in rate expectations in years.

Cross-asset H1 performance: strongest first half since 2021. Source: Bloomberg

The real surprise was who led and who didn't. The SOX semiconductor index surged nearly 90%. The Kospi posted triple-digit-level gains. But the Magnificent Seven, the defining trade of the past two years, actually lost about 2% on a total-return basis. They trailed UK government bonds. Gold, silver, and Bitcoin all finished the half lower despite months of geopolitical turmoil.

H1 2026 winners and losers: semiconductors dominate, Mag 7 and Bitcoin lag. Source: MPC Markets / Bloomberg

Barclays estimates that semiconductor and computer hardware companies generated around 87% of the S&P 500's gains during the first half. That is an extraordinary concentration. Alexander Altmann at Barclays wrote: "Your author has full faith that the second half of 2026 will be just as eventful as the first. To think that the past six months included three material geopolitical conflicts, the second-largest semiconductor rally in history, the sixth largest software selloff ever."

The consensus for the second half is cautiously optimistic, though the average year-end S&P target of 7,716 implies only about 3% upside from here. BlackRock, Invesco, and others argue the AI trade is spreading into the physical economy: power grids, data centres, industrial infrastructure. JPMorgan sees inventories turning higher and business confidence improving.

Marvin Loh at State Street issued a useful warning: "While there seems to be unlimited liquidity for the AI buildout, we can assure you that is not the case, which will likely test the availability and cost of capital in 2H." Second-quarter earnings season kicks off in the coming weeks, and that will be the next real test of whether these valuations have anything underneath them.

Oil was flat heading into the long weekend, catching its breath after a brutal four weeks. Brent settled at $71.60 and WTI at $68.47. The numbers tell the story of 2026 in miniature: Brent surged 94.5% in Q1 for its best quarter since 1990, then collapsed 38% in Q2 for its worst since the COVID crash in early 2020.

The turnaround has been driven by the US-Iran diplomacy. Since the June 17 memorandum of understanding reopened the Strait of Hormuz, tanker traffic has improved steadily. Saudi crude exports have surged to 6.3 million barrels a day, roughly 90% of pre-war February levels. Four Saudi supertankers, with a combined capacity of 8 million barrels, were spotted transiting the Gulf of Oman on Thursday.

US-Iran talks in Doha this week ended without a breakthrough, but Qatar said positive progress was made and both sides agreed to keep negotiating. The market is treating the peace process as credible enough to keep selling oil. On the supply side, US crude production hit a record 13.93 million barrels per day in April.

Commodities & FX: daily and 5-day moves. Gold and silver lead, crude and iron ore under pressure. Source: MPC Markets

Gold was the standout, surging 2.3% to $4,124/oz after the soft payrolls number. The metal had just come off its worst quarter since 2013, battered by a stronger dollar and elevated rate-hike bets. Thursday's rally was a relief trade, pure and simple: lower rates mean a weaker dollar, and a weaker dollar is bullish for gold.

Australian shares are set to open modestly higher on Thursday (our Friday). S&P/ASX 200 futures were up 52 points, or 0.6%, to 8,762, tracking the Dow's record run. The soft US jobs data should be well received by a market that has been bracing for hawkish surprises out of the Fed.

On the corporate front, Tourism Holdings has granted due diligence access to a BGH Capital-led consortium considering an all-cash offer of at least NZ$3.10 (A$2.55) per share. The board stressed this does not constitute a recommendation, and a separate offer from a strategic buyer announced in June is also in play.

In other regional news, TPG has retained Joel Thickins as partner and co-head of Asia after an independent investigation by Debevoise & Plimpton found no systemic pattern of misbehaviour following his guilty plea in a drink-driving case in Sydney.

Private credit continues to command attention. Over $14.5 billion of investor capital is now trapped across more than a dozen funds as redemption requests keep coming. Blackstone restricted withdrawals from its $79 billion flagship BCRED fund at 5% for the first time after investors tried to pull 10% of shares. Blue Owl, Ares, Morgan Stanley, and Apollo all capped withdrawals again. Goldman Sachs was one of the few managers to meet all redemption requests.

Private credit redemption pressure: Q1 vs Q2 unmet requests. Source: Robert A. Stanger / Bloomberg

US markets are closed Friday for the Independence Day holiday.

MPC Markets Global Calendar — Week 28, 6-11 July 2026. Source: MPC Markets