The Dow Jones Industrial Average reached a fresh all-time high on Thursday as investors welcomed weaker-than-expected U.S. labor market data that reduced expectations for additional Federal Reserve interest rate hikes. At the same time, continued weakness across semiconductor stocks weighed heavily on technology shares, sending the Nasdaq Composite lower for a second consecutive session.

The Dow gained 335 points, or approximately 0.6%, reaching an intraday record of 52,805.12. The S&P 500 traded near the flatline, while the Nasdaq Composite declined roughly 1% as chipmakers remained under pressure.

Semiconductor Stocks Continue to Retreat

The technology sector remained the market’s weakest performer as semiconductor shares extended recent losses.

The VanEck Semiconductor ETF (SMH) declined approximately 3%, led by sharp losses in semiconductor equipment manufacturers Teradyne and KLA, both of which fell about 12%.

Among major chipmakers, Nvidia declined 1.8%, while Micron Technology dropped 5%, adding to recent selling pressure across artificial intelligence-related stocks.

Market participants have increasingly questioned whether rapidly rising computing costs could slow enterprise AI investment after months of strong gains across semiconductor companies.

Anshul Sharma, Chief Investment Officer at Savvy Wealth, said investors appear to be rotating away from sectors that have significantly outperformed over recent months while also reassessing the broader AI investment theme.

Market Rotation Broadens

Despite weakness in technology shares, the broader market remained resilient.

Investors continued rotating into financials, industrials, healthcare, and other sectors viewed as more attractively valued following the substantial rally in artificial intelligence stocks throughout much of the year.

The major indexes remain on pace to finish the shortened holiday trading week with solid gains.

The S&P 500 is tracking for an advance of more than 1.8%, while the Dow Jones Industrial Average is poised to gain more than 1.7%. The Nasdaq Composite, despite Thursday’s decline, remains on pace for a weekly gain exceeding 2.4%.

Jobs Report Reduces Rate Hike Pressure

Investor sentiment received support from the June nonfarm payrolls report.

The U.S. economy added 57,000 jobs during the month, significantly below economists’ expectations of approximately 115,000 new positions.

However, the unemployment rate unexpectedly declined to 4.2%, compared with forecasts calling for 4.3%.

The combination of slower hiring and a stable labor market strengthened expectations that the Federal Reserve may have greater flexibility to leave interest rates unchanged in the near term.

Following the report, yields on the 2-year U.S. Treasury note moved lower as investors reduced expectations for additional monetary tightening.

Federal Reserve Outlook

Market participants continue to monitor comments from Federal Reserve Chairman Kevin Warsh, who has emphasized the importance of incoming economic data while avoiding detailed forward guidance on future policy decisions.

Bradford Smith, portfolio manager at Janus Henderson Investors, said the latest employment figures reduce immediate pressure on the Federal Reserve to raise interest rates further, particularly as energy prices have moderated and inflation pressures appear to be easing.

However, Smith also noted that Warsh has previously cautioned against placing excessive weight on initial employment reports, highlighting that labor market data often undergoes significant revisions in subsequent months.

Outlook

The latest market action reflects a shift in investor sentiment as capital rotates away from some of the year’s strongest-performing AI-related stocks toward sectors viewed as offering more attractive valuations. Meanwhile, softer labor market data has reinforced expectations that the Federal Reserve may maintain its current policy stance, providing broader support for equities despite continued volatility within the technology sector.