Weekly Market Update
Market Update for June 29-July 3, 2026
Breadth improved while semiconductors fell and yields rose.
5 Jul 2026 · YK Research
Contents
Executive Summary
U.S. equities rose modestly from the June 29 close to the July 2 close. U.S. markets were closed July 3 for Independence Day. SPY gained 0.5%, DIA gained 1.2%, and RSP gained 0.9%. QQQ fell 1.6%. The market broadened, but it did not broaden through the old leadership.
Semiconductors remained the weak spot. SMH fell 6.3% and SOXX fell 7.8%. Micron fell 14.8%. Oracle fell 5.1%. Tesla fell 4.5%. Nvidia was flat, but the semiconductor ETFs showed broad weakness.
Mega-cap software and platforms carried the other side. Apple rose 9.5%, Microsoft rose 6.0%, Meta rose 3.6%, and Alphabet rose 1.8%. That is the week’s main equity message: investors bought cash-flow platforms and sold more cyclical AI hardware exposure.
Global equities were steadier. VXUS was flat, ACWX fell 0.3%, Europe rose 1.5% through VGK, Japan was flat, China rose 0.2%, and emerging markets fell 2.6%. Ex-U.S. returns were weak but held up better than U.S. semiconductors.
Crypto diverged positively. Bitcoin rose 5.1% and ether rose 11.8%. That matters because crypto did not confirm the semiconductor selloff. Risk appetite held up, but capital moved away from crowded AI stocks.
The macro data limited the Fed's policy options. BEA’s May PCE report showed headline PCE inflation at 4.1% year over year and core PCE at 3.4%. The June payroll data from FRED showed nonfarm payrolls up 57,000, unemployment down to 4.2%, participation down to 61.5%, and average hourly earnings rising to $37.64. That is softer hiring with wage pressure still present.
Treasury yields rose. The 2-year Treasury yield rose from 4.10% to 4.14%. The 10-year rose from 4.38% to 4.49%. The 30-year rose from 4.86% to 4.98%. TLT fell 2.2%. Equities absorbed the move because credit stayed calm, but high-multiple groups underperformed.
The improvement remains limited. Breadth is better than it was during the AI selloff, yet the bull case needs semiconductors to stabilize and yields to stop rising. Continued yield increases and SOXX declines would suggest rotation rather than a sustained broad rally.
US Stock Market
The headline index hid the split. Equal weight beat SPY. Dow beat Nasdaq. Small caps lagged. Semis sold off. Investors shifted their growth exposure without selling the whole market.
Single-Name Read
The market did not sell all mega-cap technology. It sold the more exposed AI hardware and capital-cycle names, while rewarding platform companies with balance-sheet strength and visible cash flow.
Platform defensiveness worked.
Software cash flow beat hardware beta.
Memory remained the pressure point inside semis.
AI cloud enthusiasm kept losing momentum.
Global Markets
Global ex-U.S. exposure was mostly flat, with Europe the best major region and emerging markets the laggard. The message was simple: the pain was concentrated in U.S. semis and EM, not in every equity market.
Global ex-U.S. exposure was almost flat.
Broad ex-U.S. exposure held up.
Europe led among the major regional ETF proxies.
Japan was flat.
Emerging markets lagged despite a softer dollar proxy.
Cryptocurrency Market
Bitcoin rose 5.1%, from about $59.5k to $62.5k. Ether rose 11.8%, from about $1.57k to $1.76k. Ether outperformed, which fits a week where investors still wanted liquidity-sensitive exposure, just not through the same crowded equity trades.
Read-Through
Crypto’s rally is the key rebuttal to a simple de-risking story. This was not a week where investors sold everything speculative. They sold the parts of the AI trade that needed fresh earnings proof and bought assets with stronger short-term demand.
Economic Indicators, Statistics and News
United States
May personal income and outlays remained the inflation anchor for the week. BEA reported personal income up 0.7%, disposable personal income up 0.7%, current-dollar PCE up 0.7%, and real PCE up 0.3%. Demand was not the problem.
Prices were the constraint. The PCE price index rose 0.4% month over month and 4.1% year over year. Core PCE rose 0.3% month over month and 3.4% year over year. That keeps the Fed careful even with softer hiring.
The June labor data softened. FRED’s nonfarm payroll series rose from 158.927 million to 158.984 million, a 57,000 gain. The unemployment rate fell from 4.3% to 4.2%, but labor-force participation fell from 61.8% to 61.5%. Average hourly earnings rose from $37.51 to $37.64.
Weekly jobless claims improved at the margin. Initial claims fell to 215,000 for the week ended June 27 from 216,000 the prior week. The labor market is cooling, but it is not breaking.
Global
Europe
Europe outperformed through VGK, up 1.5%. That helped global ex-U.S. exposure stay flat while U.S. semis fell hard. For positioning, Europe remains useful for equity exposure with less concentration in crowded AI positions.
China and Emerging Markets
China was flat through MCHI, up 0.2%, but emerging markets fell 2.6%. Emerging markets still need more supportive dollar and commodity conditions. Without that, China stabilization is not enough.
Japan
Japan was flat through EWJ. That is fine after the prior weeks of volatility, but it did not provide enough leadership to offset weak semis and EM.
Foreign Exchange Markets
The dollar proxy softened slightly.
Euro exposure was flat.
Yen exposure strengthened modestly.
Sterling exposure rose against the dollar proxy.
FX was not the main driver. A slightly softer dollar should have helped EM more than it did. That failure is a warning that the EM weakness was not just currency translation.
Commodities and Energy Markets
Commodities split. Gold rose. Oil fell. Copper was flat. The mix suggests continued demand for hedges and limited confidence in a broad cyclical acceleration.
Commodity Read
Lower oil helps future inflation if it lasts. Gold gains suggest that policy and fiscal concerns persisted despite lower immediate oil pressure.
Debt and Fixed Income Markets
Treasury yields rose across the curve. The 2-year moved from 4.10% to 4.14%. The 10-year moved from 4.38% to 4.49%. The 30-year moved from 4.86% to 4.98%. Duration ETFs sold off and credit softened, but there was no credit break.
The front end moved modestly higher.
The long-rate move mattered for growth multiples.
Long bonds absorbed more pressure.
Duration gave back the prior week’s strength.
High yield softened but did not show stress.
What to Watch Next Week
- SOXX and SMH stabilization. If semis keep falling while SPY holds up, the market is rotating away from the AI hardware trade rather than adding broad exposure.
- The 10-year yield near 4.5%. A sustained break higher would pressure the same long-duration growth equities that already lagged this week.
- RSP versus QQQ. Equal weight beating Nasdaq is healthy only if small caps and credit join. This week IWM and HYG did not give a strong confirmation.
- Gold and oil together. Gold up with oil down means the inflation mix is improving, but demand for protection against policy uncertainty persists.
- Next inflation prints. May PCE was still hot. The market needs June CPI/PPI to show the oil drop is flowing through before the Fed can sound easier.