Chips Lead Way, Bouncing Back After Recent Swoon

Published as of: July 6, 2026, 9:15 a.m. ET

(Monday market open) The big question as earnings season looms is whether rotation out of semiconductors that took a 3% bite out of that sub-sector last week continues. Small caps were the beneficiary and had their best first half since 1991, according to Barron's, while the broader market remains just below record highs and crude oil weakens. Early today, chips made a comeback, leading indexes to fresh gains.

"The sentiment around the AI trade feels a little sour at this point, but it's possible that the recent weakness is just wringing out the excess in the market and balancing what used to be lopsided positioning in the space," said Nathan Peterson, director of derivatives research and strategy at the Schwab Center for Financial Research (SCFR), in his Weekly Trader's Outlook. "Outside of the AI theme, the broadening of the rally still appears to be underway, as the economic data and growth forecasts remain strong." Second quarter S&P 500 earnings growth is seen at 23.3% year over year, according to FactSet.

Stocks had a mixed pre-holiday session Thursday, with chips still under pressure but the Dow Jones Industrial Average jumping nearly 600 points to a record high. The weak jobs report was widely seen taking pressure off the Federal Reserve to hike rates and lifted most sectors early Thursday. But rotation soon took over. That meant a bloodbath for semiconductor stocks, as investors shifted into defensive sectors such as health care, consumer staples, and utilities—the three S&P 500 sectors that gained the most Thursday. Seven of the S&P 500's 11 sectors rose, though the index finished flat.

1. Jobs report points to consumer gloom: Following revisions to April and May, the number of new jobs has fallen for each of the past three months, to an average of 111,000 per month, a pace that is not quite sickly but not robust either. Some of the details offer clues to a long run of poor consumer sentiment reports. First is the falling labor market participation rate. About 720,000 people left the labor force in June, pushing the participation rate to the lowest level in five years. Meanwhile, long-term unemployment is on the rise, totaling 1.9 million people, an increase of 286,000 from a year earlier, and accounting for 27.3% of all unemployed people. That means more than one in four unemployed workers have been looking for a job for six months or longer. More curious is that the participation rate among people age 25-34 hit the lowest level in 50 years, aside from the COVID-19 era. Add in hourly wage growth of 3.5%—below the current headline inflation rate—and it's not hard to imagine why so many people feel gloomy.
    
2. Fed minutes offer look inside Warsh's first meeting: On Wednesday afternoon, market watchers will pore over minutes from the June 16-17 Fed meeting, new Chair Kevin Warsh's first at the helm. This was when the Fed's dot plot of rate expectations swung from predicting at least one rate cut to leaning toward one potential hike. Given Warsh's oft-stated aversion to issuing projections, the tone may be a bit different, especially if the Fed's somewhat terse, post-meeting statement is any guide. Still, investors can look for hints of division among voting members, updated perspective on inflation and the labor market, plans for a sweeping review of the way the Fed operates, and any discussion of how tariffs may still be impacting prices below the surface. Who knows? It may even offer clues to how to interpret the Fed's stripped-down communications during the Warsh era.
    
3. Take a bow, stocks: With stock markets near record highs, it should come as little surprise that the number of millionaires in the U.S. grew last year. In fact, about 440,000 Americans joined the ranks of millionaires, bringing the total to about 58 million, or nearly 9% of U.S. adults, according to UBS's annual Global Wealth Report. But give the housing market its due also. In fact, while liquid assets account for 47% of personal net wealth in the U.S., owner-occupied property represents the single-biggest asset for most people worldwide with $1 million-$5 million (in dollar terms)—a cohort that makes up the "vast majority of the world's millionaires," UBS said. Spare a thought for the Japanese, though. Japan was the only country whose ranks of millionaires with $5 million or less declined. The main culprit, according to UBS, was the protracted decline of the yen versus the U.S. dollar.

• Chips led early gains Monday, with Sandisk (SNDK) up 5% and Western Digital (WDC) also up 5% ahead of the open. Semiconductor infrastructure names also advanced, including nearly 5% for Applied Materials (AMAT) and 4% for ASML (ASML).
   
• Marvell Technology (MRVL), which cratered 9% Thursday, popped 4% early today in a sector where volatility remains pronounced.
   
• In other chip news, South Korea's Samsung Electronics reports early Tuesday and could estimate an 18-fold rise in operating profit from a year earlier in the second quarter, Reuters reported. Additionally, South Korean chipmaker SK Hynix debuts a U.S. listing today to raise approximately $28 billion, Reuters reported. Both these events could give chip stocks something new to trade on with U.S. earnings news slim this week. South Korean stocks generally fell Monday.
   
• Tesla (TSLA) fell more than 7% last Thursday despite delivering a strong report on deliveries for the second quarter. Deliveries easily beat analysts' expectations, rising 25% year over year. The company's stock has fallen after each of its past three quarterly deliveries reports.
   
• Rivian (RIVN) surged more than 7% Thursday. The EV maker reported deliveries of 12,194 in the second quarter, above its 9,000 to 11,000 outlook. And it raised its fiscal 2026 delivery outlook to 65,000 to 70,000 vehicles, Briefing.com noted.
   
• OPEC and its allies over the weekend agreed to raise crude production quotas, providing pressure on the oil market today. There are signs of recovery in shipping through the Strait of Hormuz, Bloomberg reported.
   
• Consumer demand comes into view later this week with earnings reports from PepsiCo (PEP) and Delta Air Lines (DAL) on Thursday and Friday, respectively. Consumer discretionary is the only S&P 500 sector without a year-to-date gain, Briefing.com noted.
   
• Technically, the week begins with some vulnerability in both the Nasdaq Composite and the PHLX Semiconductor Index (SOX). The Nasdaq dropped back below its 50-day simple moving average Thursday, and SOX firmly broke its uptrend, falling below support at the 20-day moving average.  Profit taking appeared to be a source of chip pressure last week.
   
• Treasuries descended last week amid hawkish commentary from the Fed's Warsh on Wednesday. The benchmark 10-year Treasury note yield climbed 10 basis points to nearly 4.48%. Rising yields—which move opposite of underlying Treasuries—appeared to bolster small caps on ideas that higher yields reflect a solid U.S. economic backdrop. Futures trading suggests 56% chance of a Fed rate hike by September, slightly down from 61% a week ago, according to the CME FedWatch Tool.
   
• Data-wise, today's a light day but does include final June S&P Global U.S. services and ISM nonmanufacturing PMI. The ISM number is seen at 54.2%, according to Briefing.com consensus, down from 54.5% for May. Anything above 50% indicates expansion.
   
• SpaceX (SPXC) gets added to the Nasdaq-100^® (NDX) tomorrow.

Trader's corner: Every Monday, remember to check Schwab's Weekly Trader's Outlook for charts, technical levels, sentiment, data, and a general discussion of what to watch for in the week ahead. In this week's report, Schwab's Peterson said July seasonality favors the bulls but could be balanced by a recent wobbles in the AI infrastructure trade.

Understanding the difference between a Roth 401(k) and Roth IRA: For anyone who has been considering a Roth contribution, Schwab's recent breakdown of a Roth 401(k) and a Roth IRA dives into the differences between the two accounts, eligibility rules, contribution limits, and more.
 

Did bitcoin futures (/BTC—candlesticks) just execute a bear market trap? Futures broke through recent lows last week, while the Relative Strength Index (lower pane) was showing bullish divergence. Then they reversed, hitting a six-day high on Thursday and "trapping" anyone who sold on a break of previous support.