It was a Great Rotation week on Wall Street. Money kept moving out of the AI and semiconductor trade that carried the market through the first half of 2026 and into the Dow's more defensive, value-tilted names — and the split in performance across the three major indexes tells the story on its own.
The week that was
The scorecard for the holiday-shortened week:
- **Dow Jones Industrial Average:** closed at a fresh all-time high on Thursday, powered by communication services and financials.
- **S&P 500:** essentially flat on the week, finishing Thursday at 7,483.
- **Nasdaq Composite:** the laggard, closing at 25,833 after a chip-led slide mid-week.
- **VIX:** down to ~15.8 — the pullback has not spooked the options market.
What drove it:
- **Semiconductors got hit hard.** $MU and SanDisk each fell more than 10% as traders took profits after triple-digit YTD runs — Micron is still up over 260% in 2026, SanDisk over 750%. Applied Materials dropped double digits too. Classic rotation after an extraordinary run, not the end of the AI trade.
- **The June jobs report broke the hot streak.** Nonfarm payrolls came in at just 57k vs 113k expected; unemployment ticked down to 4.2%. The market read it as Fed-friendly — new Chair Kevin Warsh has been leaning on data rather than pre-committing, and a cooler labour market supports holding steady.
- **$TSLA dropped ~7.5%** even after beating Q2 delivery estimates — a reminder that beat-and-drop is alive and well when expectations run hot.
- **$META popped nearly 9%** on news it is launching a cloud business to monetize excess compute capacity — one of the more interesting AI-infrastructure-spend-pays-for-itself data points of the week.
Markets are now closed for Independence Day and reopen Monday.
**Macro backdrop:** Q1 GDP was revised up to 2.1% annualized. Oil has eased back toward pre-conflict levels on signs of progress in US–Iran talks, which has taken pressure off inflation expectations — one reason the bond market has been relatively calm even as equities rotate.
The week ahead: July 6–10
A genuinely quiet week on the earnings front — the calm before the real Q2 storm. Reporting season does not hit its stride until the following week, but one name is worth circling:
- **$PEP** reports Thursday before the open. Consensus: ~$2.21 EPS (+4.2% YoY) on ~$24B revenue (+5.7% YoY). Watch PepsiCo Foods North America — there is a live debate over whether price cuts and innovation are translating into volume recovery, or if North American snacks demand is still soft.
Beyond earnings, the things actually moving markets next week:
- SpaceX joins the Nasdaq-100 effective July 7 — worth watching for index-fund flow effects.
- Continued digestion of the jobs report and what it means for the July 28–29 FOMC meeting. The committee is genuinely split — roughly half leaning toward one or two more hikes, half toward holding or cutting. That split is the single biggest swing factor for risk assets into Q3.
- Any further headlines on US–Iran talks — oil is still the transmission mechanism from geopolitics to the rate debate.
**The bigger picture:** FactSet is modelling ~22–24% YoY S&P 500 earnings growth for Q2, and Goldman has bumped its year-end S&P 500 target to 8,000 (from 7,600). That is a high bar. The real test starts the week after next, once the mega-caps start reporting.
On Earnings Compass
Quiet earnings weeks like this are exactly when it is worth getting positioned ahead of the crowd. We will have $PEP covered ahead of Thursday's print, and we are building previews for the names reporting the week after as Q2 season proper gets underway.
Explore the full July 2026 earnings calendar to see every major report coming up, or jump straight to any ticker page for live consensus, implied move, and catalyst timeline.