Stock Market Closes Higher as Fed Keeps Rates Steady, Markets Assess Weak Jobs Report
U.S. stocks diverged on Thursday with the Dow reaching new highs while the Nasdaq fell, as investors digested June's weaker-than-expected jobs report that added only 57,000 positions. Fed Chairman Kevin Warsh signaled the central bank remains focused on fighting inflation despite softening labor data.
Market Divergence Amid Jobs Softness
US stocks diverged on Thursday as investors assessed a June jobs report that tempered expectations for the Fed's next rate move, and a sell-off resumed in the chip sector. The Dow Jones Industrial Average rose more than 1.1%, nearly 600 points, toward a new record, while the S&P 500 was little changed. The tech-heavy Nasdaq Composite fell 0.8% following Wednesday's chip-sector-led slide. Shares of EV maker Tesla dropped 7% despite easily surpassing vehicle deliveries estimates for the second quarter.
Employment Data Misses Expectations
Investors digested the monthly jobs report after Federal Reserve Chairman Kevin Warsh urged Wall Street to look to data to map out the path for interest rates, rather than to the central bank for forward guidance. The nonfarm payrolls release fell short of estimates, as the economy added 57,000 jobs in June, compared with the 113,000 expected. This significant miss came after three months of stronger hiring and marks a substantial cooling in labor market momentum heading into the second half of 2026.
Semiconductor Sector Pressure Continues
Pressure on techs lingered after a sell-off in South Korean chipmakers helped drive a 7.9% plunge for the Kospi stock benchmark. Chip stocks including AMD, Micron, and Intel continued to get hit. The weakness in semiconductor equities extended the decline that began earlier in the week, reflecting broader concerns about the AI investment cycle.
Energy Markets Ease Amid Iran Talks
Markets also weighed signs that US-Iran talks may be emerging from another rough patch. Oil prices fell after Qatar, the mediator, said this week's discussions were positive, despite no breakthrough. This development offered some relief to energy-sensitive stocks and broader inflation concerns, though oil prices remain elevated compared to pre-conflict levels.