Wall Street Cheers Employment Surprise, But Nasdaq Fails to Smile

On July 2 in New York, U.S. equity markets closed mixed. The Dow Jones Industrial Average climbed 1.1% to a fresh record high, while the Nasdaq Composite slipped 0.8% and the S&P 500 finished largely unchanged. June’s nonfarm payroll report, showing just 57,000 jobs added—well below expectations—and a 4.2% unemployment rate dampened bets on a Federal Reserve rate hike this month. Short-term interest rates eased, and investors rotated into economically sensitive and value-oriented stocks.

Still, Fed Chair Jerome Powell’s remarks the previous day—reaffirming the Fed’s determination not to compromise its 2% inflation target—kept markets wary of a “higher-for-longer” interest-rate backdrop. Profit-taking hit AI and other high-growth names, while dividend-paying, financial, and defensive sectors attracted fresh buying. Semiconductor shares in both the U.S. and South Korea traded lower throughout the session amid lingering valuation concerns.

Among individual names, Tesla shares tumbled more than 6% despite record second-quarter vehicle deliveries, as investors fretted over price cuts and margin pressures. On the commodity front, oil prices—which had surged amid tensions following the Iran conflict and the Strait of Hormuz crisis—fell back below pre-crisis levels as supply worries eased, helping to temper inflation fears. Gold remained elevated, however, reflecting ongoing uncertainty around a low-growth, high-interest-rate environment. Going forward, investors will be watching upcoming employment and inflation data for signs that the Fed might adjust its policy stance.