NEW YORK – U.S. stocks traded mostly higher on Thursday as investors welcomed a weaker-than-expected employment report that strengthened expectations the Federal Reserve could hold interest rates steady at its upcoming policy meeting.
However, continued selling in artificial intelligence-related technology stocks, particularly semiconductor companies, prevented the broader market from posting stronger gains.
The mixed performance reflected growing optimism that inflation pressures may continue to ease, even as investors remained cautious about the outlook for some of the market’s biggest technology companies that have fueled much of Wall Street’s rally over the past year.
By late morning, the benchmark S&P 500 was up 0.3%, putting the index on track for its strongest weekly performance in nearly two months ahead of Friday’s Independence Day holiday, when U.S. financial markets will be closed.
The Dow Jones Industrial Average climbed 468 points, or 0.9%, while the Nasdaq Composite slipped 0.2% after giving up earlier gains as weakness among major technology and chip stocks offset strength across much of the broader market.
Investor sentiment improved after the U.S. Labor Department reported that employers added 57,000 jobs in June, well below economists’ expectations of approximately 100,000 new positions. Although the economy continued to create jobs, the slower pace of hiring suggested that the labor market may be cooling after months of stronger employment growth.
The softer employment data immediately influenced financial markets, as investors interpreted the report as reducing pressure on the Federal Reserve to tighten monetary policy further.
A slower labor market could help ease wage growth and inflationary pressures, giving policymakers more flexibility to leave interest rates unchanged while monitoring future economic developments.
Inflation concerns have intensified in recent months following higher global energy prices caused by the conflict involving Iran. Rising oil prices had fueled fears that inflation could accelerate once again, potentially forcing the Federal Reserve to resume raising borrowing costs.
However, crude oil prices have since retreated to levels below where they traded before the conflict intensified, offering some reassurance that energy-driven inflation may not become as severe as previously feared.
The bond market reacted swiftly following the release of the employment report.
The yield on the benchmark 10-year U.S. Treasury note declined to 4.47% after briefly trading around 4.50% earlier in the day. Before tensions surrounding the Iran conflict escalated, the yield had been trading closer to 3.97%.
Meanwhile, the two-year Treasury yield, which is particularly sensitive to expectations surrounding Federal Reserve policy, posted an even sharper decline.
Market participants increasingly believe the central bank will leave interest rates unchanged at its next meeting later this month under Federal Reserve Chairman Kevin Warsh.
According to futures market pricing compiled by CME Group, traders now estimate an 82% probability that policymakers will keep rates steady, up significantly from roughly 71% just one day earlier.
Brian Jacobsen, chief economic strategist at Annex Wealth Management, said the latest employment figures suggest the labor market is no longer showing signs of excessive strength.
He noted that the report gives Federal Reserve officials additional time to evaluate incoming inflation data over the coming months before deciding whether any further interest rate increases are necessary.
Lower interest rate expectations generally benefit financial markets because they reduce borrowing costs for consumers and businesses, encouraging spending, investment, and economic growth. Lower rates also tend to increase the appeal of stocks and other higher-risk assets by reducing returns available from safer investments such as government bonds.
The improved outlook for interest rates also boosted cryptocurrency markets.
Bitcoin rose approximately 3%, climbing above $61,500 after falling close to its lowest level since 2024 during the previous trading session.
The rebound in digital assets lifted shares of several companies closely tied to the cryptocurrency industry.
Robinhood Markets advanced 6.4%, while Coinbase Global gained 5.2%. Strategy, one of the largest corporate holders of Bitcoin, surged 8.8% as investors responded positively to the recovery in cryptocurrency prices.
Consumer beverage company National Beverage also delivered one of the strongest performances of the day.
Shares of the maker of LaCroix sparkling water jumped 13.2% after the company announced it would distribute a special cash dividend of $3.25 per share to shareholders.
The rally extended across much of the U.S. stock market, with roughly 70% of companies listed in the S&P 500 trading higher during the session.
Despite those gains, ongoing weakness in semiconductor companies continued to limit overall market performance.
Many chip manufacturers have experienced increased volatility in recent weeks as investors reassess whether the massive investments being made in artificial intelligence infrastructure, advanced processors, and data centers will ultimately generate the profits and productivity improvements that many had anticipated.
Some analysts believe valuations for leading AI-related companies rose too quickly during the technology boom, prompting investors to take profits as questions emerge about the pace of future earnings growth.
Memory chip manufacturer Micron Technology reversed earlier gains to fall 3.7%, extending losses after dropping more than 10% during the previous trading session.
Applied Materials declined 6.6%, while Advanced Micro Devices lost 3.8%, making them among the largest drags on the S&P 500 because of their significant market values and importance within the technology sector.
Energy markets also remained in focus as oil prices continued to decline amid hopes that diplomatic negotiations could eventually lead to a lasting resolution to the conflict involving Iran.
Brent crude, the international benchmark for oil prices, fell 1.1% to $70.78 per barrel, easing concerns that prolonged supply disruptions could reignite global inflation.
International stock markets produced mixed performances.
Several Asian markets recorded sharp declines, led by South Korea, where the Kospi index tumbled 7.9%. The sell-off was driven largely by heavy losses among semiconductor manufacturers, including SK Hynix, as investors continued reducing exposure to technology shares. The decline marked the market’s steepest drop since another major sell-off slightly more than a week earlier.
Japanese equities also came under pressure, with Tokyo’s benchmark index falling 2.5%, while Shanghai’s main stock index declined 2%.
European markets, however, outperformed many of their global counterparts.
France’s CAC 40 index climbed 1.8%, reflecting stronger investor confidence as markets across Europe benefited from easing bond yields and improving expectations that major central banks may be nearing the end of their current cycle of monetary tightening.
While concerns remain over technology valuations and global geopolitical risks, Thursday’s market action reflected renewed optimism that moderating economic growth and cooling inflation could allow the Federal Reserve to pause interest rate increases, a development many investors believe would provide further support for financial markets in the months ahead.
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