On July 1, the Dow Jones Industrial Average closed down 13.96 points (0.03%) at 52,305.24. The large-cap S&P 500 dropped 16.13 points (0.22%) to finish at 7,483.23, while the tech-heavy Nasdaq fell 173.69 points (0.66%) to close at 26,040.03.
The market pressure stemmed from semiconductor stocks, with the Philadelphia Semiconductor Index plummeting over 6%. Micron Technology saw intraday losses of 9% to 10%. Although there were no specific negative developments for Micron, the stock's recent surge driven by expectations of AI memory demand led to concentrated profit-taking.
Selling pressure spread across the semiconductor sector. While enthusiasm for AI investments continues, concerns over high valuations resurfaced, prompting some investors to shift funds from AI semiconductor stocks to AI software stocks, resulting in sector rotation. Consequently, technology stocks within the S&P 500 experienced the largest declines.
However, Meta Platforms' stock surged 8.8%, partially offsetting the index's losses. Bloomberg reported that Meta is building a cloud business to sell its excess AI computing capacity. Despite ongoing pressures from AI infrastructure spending, expectations that the company can monetize this business boosted its stock price.
Investors are also closely watching the Federal Reserve's monetary policy direction. Fed Chair Kevin Warsh recently assessed that inflation risks have diminished but reaffirmed the commitment to the 2% inflation target. The market is weighing the possibility of the Fed holding interest rates steady this month while leaving open the potential for at least one rate hike later this year.
Uncertainties surrounding U.S.-Iran negotiations also limited investor sentiment. Although the two countries signed a temporary agreement last month, reports indicate that there has been little progress toward a sustainable peace agreement in subsequent talks. Additionally, trading has slowed ahead of the Independence Day holiday, contributing to a weaker directional trend for the indexes.
Market participants are focused on the U.S. employment report for June, set to be released on July 2. According to a Reuters poll, non-farm payrolls are expected to increase by 110,000, with the unemployment rate holding steady at 4.3%. Earlier, the ADP private employment report showed an increase of only 98,000 jobs, falling short of the market expectation of 118,000.
International oil prices fell as expectations surrounding U.S.-Iran negotiations eased concerns about supply disruptions in the Strait of Hormuz. West Texas Intermediate (WTI) crude dropped 2.03% to $68.09 per barrel, while Brent crude fell 2.44% to $71.17 per barrel.
* This article has been translated by AI.
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