Wall Street Ends Mixed as Weak Jobs Data Lowers Fed Rate Hike Bets, Chip Stocks Tumble

Wall Street closed mixed on Thursday as losses in technology shares, led by semiconductor companies and Tesla, offset optimism from a weaker-than-expected U.S. jobs report that reduced expectations for additional Federal Reserve interest rate hikes.

The S&P 500 slipped 0.1% to finish at 7,478.66, while the Nasdaq Composite fell 0.8% to 25,832.67 as chipmakers extended their recent selloff. In contrast, the Dow Jones Industrial Average climbed 1.1% to a record closing high of 52,899.24. Despite Thursday’s mixed performance, all three major U.S. indexes posted solid weekly gains ahead of the Independence Day holiday, with the S&P 500 rising 1.7%, the Nasdaq gaining 2.1%, and the Dow advancing 2%.

Investor attention remained centered on the latest U.S. labor market data. The Bureau of Labor Statistics reported that nonfarm payrolls increased by just 57,000 in June, well below economists’ expectations of 114,000 and lower than May’s revised gain of 129,000. Hiring remained strongest in professional and business services, healthcare, and social assistance, while employment declined in leisure and hospitality.

Although job creation slowed, the unemployment rate edged down to 4.2% from 4.3%, and the three-month average payroll increase stood at roughly 111,000, suggesting the labor market remains relatively resilient.

The softer employment report reinforced expectations that the Federal Reserve may keep interest rates unchanged rather than raise them further. Fed Chair Kevin Warsh recently noted that inflation risks have eased following the sharp decline in oil prices after the U.S.-Iran interim peace agreement reopened the Strait of Hormuz. As a result, traders reduced their expectations for future rate hikes, pushing the U.S. dollar lower while Treasury yields also declined.

Market analysts said the combination of easing inflation concerns and steady employment gives the Fed more flexibility to maintain its current policy stance.

Technology stocks faced renewed selling pressure, particularly semiconductor companies. The Philadelphia Semiconductor Index dropped more than 11% over the past two sessions after posting its strongest quarterly performance on record with an 87.8% surge. Investors increasingly questioned whether massive artificial intelligence spending can continue at its recent pace, prompting profit-taking across AI-related stocks.

Additional pressure came after reports that Meta Platforms is considering selling excess AI computing capacity to outside companies, fueling speculation that major technology firms may slow capital spending on AI infrastructure. Analysts said such developments could trigger a broader rotation away from semiconductor stocks that have fueled much of this year's market rally.

Tesla also declined despite reporting record quarterly vehicle deliveries that exceeded Wall Street's most optimistic forecasts. The stock had already rallied around 12% ahead of the announcement, leaving investors inclined to lock in profits after the strong results.

Meanwhile, OpenAI drew attention after reports indicated the company had proposed granting the U.S. government a 5% ownership stake as it prepares for a potential initial public offering, adding another notable development in the rapidly evolving AI sector.