US Stocks rose on July 6, with the Dow Jones Industrial Average closing at 53,055.91, up 0.29%, marking a new all-time high, while the S&P 500 gained 0.72% to 7,537.43 and the Nasdaq Composite advanced 1.12% to 26,121.16. The rally followed a holiday closure and was driven by bargain buying in technology stocks, particularly semiconductors, as investors anticipated Samsung Electronics' second-quarter earnings report on July 7 and SK Hynix's American Depositary Receipt listing on Nasdaq on July 10. US stocks had declined ahead of the Independence Day holiday, but returned with renewed buying interest in AI and semiconductor-related shares.
Philadelphia Semiconductor Index Rebounds 2.17% on Samsung and SK Hynix Expectations
The Philadelphia Semiconductor Index rose 2.17% on July 6, recovering from a two-day decline. TSMC, Broadcom, and ASML each gained approximately 4%, while AMD advanced 6.61%. Technology-focused asset managers Bailey Gifford, Coatue Management, and Situational Awareness announced plans to purchase up to $7 billion worth of SK Hynix ADRs combined. Bailey Gifford is known as an early investor in Tesla.
Samsung Electronics is expected to report second-quarter operating profit exceeding 100 trillion won excluding performance bonus provisions when it releases earnings on July 7. SK Hynix's ADR listing on Nasdaq is scheduled for July 10.
Anthony Saglimbene, chief market strategist at Ameriprise Financial, stated, "Expectations are very high, so I'm not sure semiconductor stocks will rise as much in the second half as they did in the first half. If fundamentals are confirmed to be solid, stock prices can rise a bit more." He added, "I expect volatility between AI industry leaders and the overall market in the coming months. It depends on whether AI-related companies can reaffirm their outlook and generate solid earnings."
Communications services and technology sectors each rose more than 1%, while healthcare declined more than 1%. Nvidia gained 0.37% and Apple rose 1.31%. Nvidia's market capitalization fell to $4.73 trillion amid semiconductor stock volatility, narrowing the gap with Apple's $4.59 trillion to $140 billion. Dell Technologies jumped more than 4% after President Donald Trump recommended purchasing Dell products on July 6.
According to the CME FedWatch Tool, the federal funds rate futures market priced in a 24.8% probability of rates remaining unchanged by the end of December, a 42.4% chance of a 25 basis point increase, and a 25.7% probability of a 50 basis point increase.
Fed's Waller States Labor Market and Inflation Risks Have Completely Flipped
US Treasury yields showed mixed movements on July 6. The 10-year Treasury yield declined 0.60 basis points to 4.4800%, while the 2-year yield fell 1.40 basis points to 4.1250%. The 30-year yield rose 0.60 basis points to 4.9930%. The 30-year yield faced resistance at the market-watched 5.0% level.
The ISM services purchasing managers index for June fell 0.5 points to 54.0, remaining above the baseline of 50 for the 24th consecutive month. The employment subindex rose 3.3 points to 51.2, crossing above 50 for the first time since February (51.8), before the Iran war impact was reflected. The prices paid index declined from 71.3 in May to 67.7.
Steve Miller, chair of the ISM Services Business Survey Committee, explained regarding the employment index, "Businesses are giving confidence that they can justify selective but moderate employment growth. Employment growth related to the US World Cup likely contributed significantly to the rise in the employment index."
Federal Reserve Governor Christopher Waller stated at a European System of Central Banks research network event in Rome, Italy, that forward guidance remains a valuable monetary policy tool in appropriate circumstances. In a subsequent Q&A session, he recalled, "A year ago I was advocating for rate cuts because the labor market didn't look good," adding that risks to the labor market and inflation have now "completely flipped." He noted, "The US labor market appears to be stabilizing. Inflation is on an upward trajectory. So this changes how you want to think about policy."
Brian Jacobsen, chief economist at Annex Wealth Management, stated, "A lot can change by the July 28-29 Fed meeting. A relatively weak June employment report and oil prices falling back to pre-conflict levels have already somewhat weakened rate hike expectations." He added, "The Fed won't release an updated dot plot at the July meeting, but it wouldn't be surprising if there were hints that the pessimistic outlook on inflation has changed."
The US Treasury will auction a total of $119 billion in Treasuries over three consecutive days starting the next day: $58 billion in 3-year notes, followed by $39 billion in 10-year notes and $22 billion in 30-year bonds.
ECB's Schnabel Warns Core Inflation Momentum Remains Strong in Eurozone
The dollar declined slightly on July 6. The dollar-yen exchange rate rose 0.928 yen (0.576%) to 162.054 yen, while the euro-dollar rate increased 0.00106 dollars (0.093%) to 1.14414 dollars. The dollar index declined 0.016 points (0.016%) to 100.864.
Isabel Schnabel, executive board member of the European Central Bank regarded as the ECB's "power player," warned on July 6, "Headline inflation in the eurozone has come down from its peak, but core inflation has been much less responsive and its momentum is still strong." The euro-dollar rate reversed higher in New York trading following Schnabel's remarks. The euro-yen rate surged 1.220 yen (0.662%) to 185.40 yen.
The pound-dollar rate rose 0.00462 dollars (0.346%) to 1.33918 dollars. The pound has gained strength recently as political uncertainty eased. Prime Minister Keir Starmer announced his intention to resign in late last month, and Andy Burnham is likely to become the next prime minister barring any surprises.
Mark Dowding, chief investment officer of bonds at RBC BlueBay Asset Management, explained he had held a short pound position due to UK political noise but closed it after Starmer's resignation announcement. He stated, "The market reaction was surprisingly calm, reflecting that the trade wasn't gaining as much traction as we thought, so we closed the position."
The offshore dollar-yuan (CNH) rate rose 0.0064 yuan (0.094%) to 6.7942 yuan.
OPEC+ Increases August Production Target by 188,000 Barrels Per Day
West Texas Intermediate crude for August delivery fell 0.14 dollars (0.20%) to $68.55 per barrel on July 6, while Brent crude for September declined 0.13 dollars (0.18%) to $71.99 per barrel.
Oil prices have continued a sideways trend after falling to pre-war levels following the memorandum of understanding signed between the US and Iran. The market is interpreted as cautiously monitoring ceasefire negotiation developments.
Giovanni Staunovo, analyst at UBS, stated, "Oil tankers that were stuck in the Strait of Hormuz are trying to escape the Gulf, increasing oil supply at sea. This is a factor that continues to put downward pressure on oil prices."
OPEC+'s decision to increase production in August and the United Arab Emirates' production increase after leaving OPEC are also capping oil price upside. The UAE increased crude oil production to more than 3.8 million barrels per day after withdrawing from OPEC in June, nearly an all-time high.
OPEC+ announced on July 5 that it will increase crude oil production by 188,000 barrels per day starting in August. OPEC+ has been continuously increasing production for five months since April. Production increases during this period total 940,000 barrels.
Robert Yawger, director of energy futures at Mizuho, stated, "Gulf oil-producing countries appear to be preparing for a price war."
FAQ
What caused US Stocks to rise on July 6?
US Stocks rose on July 6 following a holiday closure, driven by bargain buying in technology and semiconductor stocks. Investor anticipation of Samsung Electronics' second-quarter earnings report on July 7 and SK Hynix's ADR listing on Nasdaq on July 10 contributed to the rally. The Philadelphia Semiconductor Index gained 2.17%.
What did Fed Governor Christopher Waller say about inflation and the labor market?
Christopher Waller stated at a European System of Central Banks event in Rome that risks to the labor market and inflation have "completely flipped" from a year ago. He noted the US labor market appears to be stabilizing while inflation is on an upward trajectory, which changes how policymakers think about policy.
How much did OPEC+ increase its August production target?
OPEC+ announced on July 5 that it will increase crude oil production by 188,000 barrels per day starting in August. This marks the fifth consecutive month of production increases since April, with total increases during this period reaching 940,000 barrels per day.
