As the market digests the recent jobs report, investors are bracing for a relatively quiet week ahead. The holiday-shortened week was filled with a plethora of labor market data and a surprising jobs report, leaving markets unsure of their next move.
Market Outlook
Markets will pick up after a mixed Thursday that saw an unsure market with the S&P 500 (^GSPC) closing flat, the Nasdaq (^IXIC) falling 0.8%, and the Dow (^DJI) gaining 1.1%. Monday is likely to be the biggest day to watch on the economic calendar, with a host of index readings from S&P Global and the Institute of Supply Management set to give investors a read on the state of the US service economy.
Jobs Report Complicates Rate-Hike Bets
The US economy added 57,000 jobs last month, roughly half the jobs economists had expected. At the same time, May’s massive 172,000 addition was revised down to 129,000, and April’s tally was lowered to 148,000 from 179,000. While the market continued to fully price in one Fed rate hike this year following the report, markets pulled back slightly on their conviction. On Thursday morning, traders assigned roughly 75% odds that rates would end the year higher than they are now, per CME data. On Wednesday, those odds stood at roughly 84%.
The First-Half AI Story: All About Hardware
The tech trade through the first half of 2026 was, in a word, imbalanced. The iShares Expanded tech and software ETF (IGV), which tracks a variety of names in the tech sector, is down 12% on the year. Even the Magnificent Seven (MAGS), once the bastions of Big Tech, have, as a group, lost investors 2% over the past six months. Chip stocks, on the other hand, have had a blowout six months driven by euphoria around memory and storage sales and the need for traditional processors to power the AI build-out.
Micron (MU) was the poster child for explosive growth in the first two quarters of the year, with shares rising an astonishing 308%. Intel (INTC), which is continuing its turnaround effort, rose a similarly impressive 280%, while AMD (AMD) rocketed 173% higher in the period. Take it all together, and the Philadelphia Semiconductor Index (^SOX), which tracks the chip trade, has returned investors roughly 75% since Jan. 1.
According to Bank of America tech analyst Vivek Arya, the trend’s not likely to go anywhere, as the build-out of the physical backbone behind AI continues to rush forward. It’s one more reminder that while AI might be the brainchild of software-minded Silicon Valley, the AI economy is physical.
