TLDR
- The S&P 500 is up more than 7% in 2026 but stocks have struggled in June
- June jobs report drops Thursday and a strong number could trigger rate hike bets
- The Fed signaled a hawkish stance at its latest meeting, focused on inflation control
- Semiconductor stocks surged 85% from March lows but pulled back sharply this week
- Inflation broke above 4% for the first time in three years, fueled by energy prices
Wall Street heads into the new week with one eye on Thursday’s jobs report and the other on a tech sector that has been swinging wildly. The combination of rate hike fears and volatile chip stocks has investors on edge as the first half of 2026 wraps up.
The S&P 500 is up more than 7% for the year so far. But June has been a rougher month, with stocks giving back some of their earlier gains.
Jobs Report in Focus
The June payrolls report lands Thursday. Economists polled by Reuters expect the economy added around 110,000 jobs last month. The U.S. economy posted 172,000 new jobs in May, continuing three straight months of solid gains.
A strong jobs number could be bad news for stocks. Investors worry it would push the Fed toward raising interest rates rather than cutting them.
“If we do get a really good jobs number, my guess is the market’s not going to treat that as good news,” said Doug Huber of Wealth Enhancement. He said it would likely raise the odds of a rate hike.
Fed funds futures now show better-than-even odds of a rate hike by September. That is a sharp reversal from the start of 2026, when markets expected rate cuts by year-end.
The Fed made clear at its latest meeting that controlling inflation is the priority. Inflation has now broken above 4% for the first time in three years, partly driven by higher energy costs tied to the Middle East conflict.
Higher rates raise borrowing costs for companies and consumers. They also slow economic growth and can weigh on stock valuations.
Semiconductor Stocks Under Pressure
Tech stocks have been the main story on Wall Street for months. The Philadelphia Semiconductor Index climbed 85% from the market’s late-March low. But it pulled back this week as investors questioned whether the rally had gone too far.
Micron Technology reported strong earnings Wednesday, which gave the sector some support. Still, the Nasdaq fell more than 4% on the week.
“The live question is, are higher interest rates going to threaten the more cyclical and volatile component of market leadership at play?” said Julia Hermann of New York Life Investment Management.
Oil prices have eased, dropping to around $70 a barrel from $100 a month ago following a ceasefire in the Middle East. That could help ease inflation pressure if it holds.
#earnings for the week of June 29, 2026https://t.co/hLn2sKQhEY$NKE $AVAV $STZ $GIS $FDS $BSET $CNXC $FC $UNF $MSM $PRGS $GBX $LNN pic.twitter.com/qBHlNzR0VL
— Earnings Whispers (@eWhispers) June 26, 2026
Nike earnings are also on the schedule next week. Second-quarter earnings season picks up more broadly in mid-July.
The Fed remains in a difficult position. Jobs data that surprises in either direction could shift expectations quickly heading into the second half of the year.
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