Weekly Market Update – July 3, 2026

Quick Takes

• The holiday-shortened week was a mixed bag of market and economic news. Large-cap stocks continued higher, while small-caps lagged. Meanwhile, rising Treasury yields weighed on bond returns, and economic data showed slower job growth but resilient business activity.
• For the week, the S&P 500 Index and Nasdaq Composite posted gains of +1.8% and +2.1% respectively, while the Russell 2000 and S&P MidCap 400 Index declined -0.5% and -0.4%. Overseas, developed markets gained +1.9% while emerging markets fell -1.3%.
• Bond investors faced challenges as Treasury yields increased across most maturities, resulting in negative returns for many fixed-income sectors. The Bloomberg U.S. Aggregate Bond Index returned -0.5%, giving back the prior week’s gain of the same amount.

Source: Bloomberg. Data as of July 3, 2026.
Price Returns for Equity, Total Returns for Bonds.
* The term basis points (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01%. Bond prices and bond yields are inversely related. As the price of a bond goes up, the yield decreases.

Stocks Mixed as Investors Rotate, Bond Yields Rise, and Economic Data Sends Mixed Messages

U.S. markets closed early for the Independence Day holiday week, leaving investors with a mixed bag of market and economic news. Large-cap stocks continued to edge higher, while smaller-company shares lagged. Meanwhile, rising Treasury yields weighed on bond returns, and fresh economic data painted a picture of slower job growth alongside resilient business activity. Here’s what mattered most across U.S. stocks, international markets, bonds, and the broader economy.

U.S. Stocks: Large Caps Hold Up as Market Rotation Continues

Major U.S. stock indexes ended the holiday-shortened week with mixed results. The S&P 500 Index and Nasdaq Composite posted gains, up +1.8% and +2.1% respectively, while the Russell 2000 and S&P MidCap 400 Index declined, down -0.4% and -0.3%, respectively.

Leadership shifted among sectors as investors favored areas seen as more defensive. Within the S&P 500, communication services, financials, and consumer discretionary stocks posted strong gains, while real estate, utilities, and energy shares moved lower.

One notable trend on Wall Street has been a cooling appetite for some of the market’s hottest artificial intelligence-related investments. Semiconductor stocks, which have been among the biggest beneficiaries of the AI boom, have recently fallen out of favor as investors rotate capital into other sectors.

International Stocks: Developed Markets Rally While Emerging Markets Sag

Overseas markets produced mixed results. Developed international stocks performed well, with the MSCI EAFE Index rising +1.9%, fully reversing the prior week’s -1.8% decline.

• Europe led the gains. The United Kingdom advanced +2.5%, while broader European markets gained +2.3%. Germany stood out with a +3.9% increase, helped by stronger-than-expected retail sales that rose +1.1%, defying forecasts for a slight decline.
• Japan also moved higher, gaining +1.2%. Investor sentiment was supported by the country’s quarterly Tankan survey, which showed confidence among large manufacturers improving for a fifth consecutive quarter and reaching its strongest level since 2018.

Emerging markets told a different story as the MSCI Emerging Markets Index fell -1.3%. 

• South Korea tumbled -11.9% amid weakness in memory and semiconductor chip makers. Despite the sharp weekly decline, South Korean equities remain up an impressive +94% in 2026.
• China provided a brighter spot, rebounding +1.9% after the previous week’s -6% drop. The recovery was fueled by stronger-than-expected manufacturing data and additional short-term liquidity support from the People’s Bank of China.

Bonds: Rising Treasury Yields Pressure Fixed-Income Returns

Bond investors faced challenges as Treasury yields increased across most maturities, resulting in negative returns for many fixed-income sectors.

The yield on the benchmark 10-year U.S. Treasury note rose +11 basis points to 4.48%, while the 2-year Treasury yield increased +4 basis points to 4.14%. Because bond prices move inversely to yields, higher rates translated into lower bond prices.

Investment-grade corporate bonds also generated negative returns, although they modestly outperformed Treasuries. Demand for new corporate bond offerings remained strong, with many new issues oversubscribed. Sentiment in the high-yield market was better as the sector returned +0.3%.

As yields climbed, the Bloomberg U.S. Aggregate Bond Index returned -0.5%, giving back the prior week’s gain of the same amount. International bonds fared slightly better, with the Bloomberg Global Aggregate Bond ex U.S. Index posting a +0.1% return after a -0.5% decline the week before.

Economics: Slower Job Growth but Signs of Resilience Remain

Economic reports released during the week delivered a mixed message about the health of the U.S. economy.

• Labor Market Cools. June payroll growth slowed more than expected. The economy added 57,000 jobs, roughly half the level economists anticipated. Adding to the softness, payroll gains for the prior two months were revised lower by a combined 74,000 jobs. The unemployment rate unexpectedly improved to 4.2% from 4.3%, but the decline was driven in part by a lower labor force participation rate. Following the report, expectations for additional Fed hikes eased as CME FedWatch data showed that the probability of a rate hike fell to about 18%, down from 29% the previous day.
• Job Openings Remain Strong. Despite slower hiring, labor demand remained relatively healthy. Job openings increased to 7.594 million, surpassing expectations and reaching their highest level in a year.
• Manufacturing Continues to Expand. The Institute for Supply Management reported that its manufacturing PMI slipped 0.7 points to 53.3 in June, missing expectations for approximately 53.9. Even so, the reading marked the sixth consecutive month of expansion, as any reading above 50 signals growth. New orders and production slowed but remained in expansion territory. Encouragingly, the price paid index dropped sharply.
• Consumer Confidence Remains Weak. Consumer confidence continued to be subdued. The Conference Board’s consumer confidence index registered 91.2 in June, below expectations but slightly above May’s revised reading of 90.6. While consumers became somewhat more optimistic about future conditions, their assessment of current conditions weakened. The share of respondents saying jobs were “hard to get” climbed to its highest level in more than five years.
• Housing Prices Continue to Rise. The housing market remained firm as the Case-Shiller U.S. National Home Price Index increased +0.85% year over year in April.

Monetary Policy: New Fed Leadership Signals Potential Change

Federal Reserve Chairman Kevin Warsh drew considerable attention during remarks at the European Central Bank’s annual symposium in Portugal. Warsh said he intends to “chart a new course” for the central bank and hinted at lively discussions during the upcoming July Federal Open Market Committee meeting. While avoiding specific rate guidance, he noted that inflation risks have moderated since he took office, though inflation remains above desired levels.

He described the current environment as a “time of huge opportunity” for the United States, citing the country’s leadership in artificial intelligence. Warsh also reiterated his preference for a smaller Federal Reserve balance sheet while emphasizing that future decisions would be made through a transparent public process.

The Bottom Line

Investors entered the holiday weekend facing a mixed landscape. U.S. stocks continued to show resilience, but weakness in semiconductors highlighted a potential market rotation. International developed markets outperformed, while emerging markets struggled. Rising Treasury yields pressured bond returns, and economic data suggested slowing employment growth without signaling a broad downturn. With inflation easing in Europe and the Federal Reserve entering a potentially new chapter under Chairman Warsh, markets appear poised to remain focused on both economic momentum and the future direction of monetary policy.

Chart of the Week

The June Employment Situation Report disappointed with a below-expected 57,000 new Nonfarm Payrolls, ending a streak of three consecutive upside surprises. Wall Street was expecting 113,000 new jobs. Moreover, May’s reading was revised lower to 129,000 from 172,000, and April was revised lower to 148,000 from 179,000. The pullback was led by the biggest decline in Leisure and Hospitality payrolls since 2020 — “reflecting weaker than usual seasonal hiring,” according to the Bureau of Labor Statistics (BLS) — following a strong increase in May. Ahead of the report, some economists were expecting the FIFA World Cup, which kicked off last month, to boost payrolls in the sector. The Health Care and Social Assistance sector, which has been a primary driver of job growth in recent years, continued to lead hiring, accounting for most of the increase in June. Manufacturing and Construction payrolls also rose. Many economists have pointed to the data-center buildout as a possible driver of demand for construction labor in 2026, even as homebuilding continues to be subdued by elevated interest rates. The jobs report comprises two surveys, one of Households and the other of Employers. The Survey of Households, which is used to calculate the Unemployment Rate and Participation Rate, was more downbeat, though it tends to also be more volatile. The Unemployment Rate ticked down to 4.2% from 4.3%, which is a historically low rate. The Labor-Force Participation Rate, which is the share of Americans working or looking for work, slipped to 61.5% — its lowest level in 50 years. It was expected to stay at 61.8%. The Employment-Population Ratio decreased two ticks to 59.0% from 59.2% the prior month. Average Hourly Earnings (AHE) rose +0.3%, matching expectations and the prior month’s unrevised level. On an annual basis, AHE were up +3.5%, in line with expectations and up from an unrevised +3.4% the prior month. The Fed would like to see wage growth slow to around +3% annually or less, a level it sees as consistent with low inflation. Average Weekly Hours Worked remained at 34.3 hours, matching expectations. June Private Sector Payrolls were up 49,000, less than half the 107,000 Wall Street expected. May private payrolls were revised to 97,000 from 120,000 and April private payrolls were revised down to 150,000 from 177,000. The bottom line is the June employment report was mixed with softer payrolls growth but with a lower unemployment rate. Hourly earnings were in line with expectations too. Overall, it should relieve expectations for the Fed to hike rates any time soon.

U.S. Job Growth Cooled in June, the Unemployment Rate Edged Down to 4.2%

Monthly job creation in the U.S.

Source: U.S. Bureau of Labor Statistics via FRED, CNBC.

The Week Ahead

Investors can catch their breath from the holiday weekend as the economic calendar is quite light this week. The Institute for Supply Management (ISM) and competitor S&P Global both release their Services Purchasing Managers’ Indexes (PMIs) on Monday. The only release Tuesday is the U.S. Trade Balance. Wednesday is the busiest of the week with MBA Mortgage Application, Wholesale Inventories and Trade, Consumer Credit, and the Federal Open Market Committee (FOMC) June meeting minutes. The National Association of Realtors reports Existing-Home Sales on Thursday, plus weekly Jobless Claims. There are no reports scheduled for Friday. 

Earnings reports will also be light with just two S&P 500 companies reporting. PepsiCo announces quarterly results on Thursday and Delta Air Lines reports on Friday. Second-quarter earnings season will pick up the following week when the big banks release their results on July 14.

Did You Know?

HOME OF THE UHNW – In 2025, the worldwide number of Ultra High Net Worth (UHNW) individuals (net worth >$30 million) increased +14.4% year over year to 556,850, and their ranks have doubled since 2015. The U.S. is home to the most UHNW individuals, comprising 37% of the global total — more than the other top 10 countries combined. (Source: Altrata)

GLUT CHECK – New home sales for May were weaker than expected, coming in at 580K versus forecasts of 632K. Based on the current pace of sales, it would take 10.3 months to sell the entire stock of new homes on the market, which is tied with July 2022 for the highest monthly supply since April 2009. (Source: US Census)

BIOTECH BREAKOUT – Overshadowed by AI, biotech stocks have quietly surged lately. The Nasdaq Biotechnology Index rallied +10% from 6/2 to 6/24 to reach all-time highs while the S&P 500 declined -3% over the same time frame. Since April 2025 lows, biotech is up +47%. (Source: Bloomberg)

This Week in History

SHERMAN ACT – On July 2, 1890, in a backlash against the monopolistic excesses of the “robber barons,” the Sherman Antitrust Act, authorizing the U.S. Department of Justice to investigate and break up giant industrial monopolies, became law. (Source: The Wall Street Journal)

Economic Review

• The Bureau of Labor Statistics reported the Job Openings Labor Turnover Survey (JOLTS) showed that Job Openings rose to 7.594 million in May, the highest level since May 2024. That was up from 7.585 million the prior month after being revised lower from 7.618 million, and beat Wall Street estimates for 7.296 million. The increase in openings was driven primarily from an increase in wholesale trade (+71,000). The ratio of Job Openings to Unemployed Workers was 1.04, up from 1.03 the prior month and down from a peak of 2.0 in July 2022, which is the pre-pandemic level the Fed wants to see it at. The Hiring Rate was steady at 3.3%. It typically ranges from 3.7% to 4.0% in a strong economy. The Number of People Quitting Jobs was 3.065 million, up from 3.043 million the prior month (revised lower from 3.171 million). The record was 4.5 million job quitters in late 2021. The Quits Rate was unchanged at 1.9%, which is where it was expected to remain. The Layoffs Rate improved to 1.1% from 1.0% the prior month after it was revised lower from +1.1%, remaining below the 1.4% annual average from 2010 to 2019. 
• The Institute for Supply Management’s (ISM) Manufacturing PMI dipped to 53.3% in June, below expectations for 53.9% and down from an unrevised 54.0% the prior month. Still, that is now five straight months solidly above 50%, following 11 consecutive months below 50.0% (above 50% indicate economic expansion, levels below 50% indicate contraction). New Orders, a sign of future demand, decreased to 56.0% from 56.8% the prior month. The Production index fell to 52.2% from 54.3%. The New Export Orders index slipped to 48.5% from 50.6%. The Employment component rose to 49.7% from 48.6% the previous month. Regarding the inflationary aspect of the report, the Prices index fell to 73.0% from 82.1% the prior month.  The key takeaway is that there was a modest slowdown in June versus May across most components of the report, but there was also a big slowdown in the prices index, which is still high but moving down.
• The final reading for the S&P Global US Manufacturing PMI slipped to 53.9 in June, down from the 55.7 preliminary reading and below the 55.1 final reading the month before. But that now makes the nine consecutive months in expansion. Higher Output (Production) and New Orders continued to expand again, although the growth was slower than the flash estimate.  Business Confidence softened for a second straight month, but companies were still optimistic about future activity. On the downside, Employment fell for a second consecutive month, with job cuts accelerating at the fastest pace since May 2020. Input Prices saw another sharp increase, largely from higher raw materials prices. Output Prices rose again, but at a more moderate pace, now at a three-month low. The bottom line is that June showed a more cautious picture, but still in expansion.
• The Commerce Department reported that Factory Orders declined -1.3% in May, beating expectations to fall -2.0% but down from +5.3% the prior month (after being revised higher from +4.8%).  Factory Orders Excluding Transportation were up +1.9%, beating expectations to rise +1.0% and up from +1.7% the prior month (revised higher from the originally reported +1.3%). The final read for May Durable Goods Orders (long-lasting items such as televisions, appliances, and transportation equipment) was -4.5%, unchanged from the advance report two weeks earlier, which is where they were expected to stay. That followed a +1.3% increase the prior month. Durable Goods Orders Excluding Transportation were up +1.4%, a tick up from the advance reading of +1.3% and up from +1.9% the prior month. The important Core Capital Goods Orders (capital goods excluding volatile sectors like transportation and defense), and a proxy for business spending, slid to +1.4%, down from the +1.6% advance reading where they were the prior month. Core Capital Goods Shipments, which are factored into GDP, rose +0.1%, just under the +0.3% preliminary read and down from +0.5% the month before. The inventory-to-shipments ratio was 1.47 compared to 1.49 the month before. A key takeaway from the report is that the headline number weakness was mostly a large decline in volatile transportation equipment orders. Excluding those, factory orders were quite solid in May.
• The Conference Board Consumer Confidence Index increased to 91.2 in June from a downwardly revised 90.6 the prior month (revised lower from 93.1). That was below Wall Street expectations to come in at 94.4. In the same period a year ago, the index stood at 95.2. The Present Situation gauge fell to 116.4 from 119.4 the prior month (revised lower from 121.2). The Expectations gauge — which reflects consumers’ six-month outlook — rose to 74.4 from a downwardly revised 71.4 (originally 74.4). Sustained levels below 80 on the expectations index can signal a recession within the next year, while in good times the index can top 120 or more.
• The Texas Manufacturing Outlook Survey was flat in June, with the General Business Activity at 0.0, down from an unrevised +0.4 the prior month, and below expectation for a reading of +0.1. The Production sub-index, a key measure of the state’s manufacturing activity, slowed -5.3 points to +4.1. Other measures of manufacturing activity were mixed. The Capacity Utilization index rose +2.1 points to +7.3, but the New Orders index decreased to +2.3 from +6.4, while the Shipments index was little changed at +7.1 versus +7.4 the prior month. On the other hand, Employment improved sharply to +13.9 from +0.2 and Capital Expenditures rose to +11.4 from +6.0. Prices Paid ticked down to +42.4 from +42.7, but Prices Received jumped to +28.6 from +18.9. Indicators of Future Business Activity Six Months from Now jumped to +25.9 from +14.3. The Texas Service Sector General Business Activity improved sharply, rising to +2.9 from an unrevised -7.7 the prior month (unrevised), which was much better than expectations to come in at -5.0.
• The Chicago Purchasing Managers Index (PMI), a barometer for the region’s business and manufacturing conditions (also known as the Chicago Business Barometer), fell to 56.7 in June from an unrevised 62.7 in May. Still, that was above Wall Street expectations for a 55.1 reading (readings above the 50 level indicate economic expansion). The decline was driven by weaker New Orders, but they remained in expansion for a second consecutive month. Production nearly reversed the previous month’s gain. The decline was partly offset by increases in Supplier Deliveries, reflecting longer lead times linked to the Middle East conflict, as well as gains in Order Backlogs and Employment. Meanwhile, Prices Paid edged higher, driven by rising oil and metal prices.
• According to the S&P Cotality Case-Shiller 20-City Home Price Index, US housing prices were little changed in April, slipping -0.04% after a -0.15% slide the prior month (revised down from +0.14%). That was better than expectations for a -0.10% decline. Of the 20 cities tracked by the index, 13 declined month-over-month with Phoenix down the most (-0.61%), followed by Las Vegas and Seattle which both fell -0.53%, while Chicago led to the upside, rising +0.65% followed by Washington with a +0.21% gain. On a year-over-year (YoY) basis, the 20-city index was up +1.14%, above expectations for a +0.90% rise and up from a +0.88% annual increase the month before (revised higher from +0.83%). Chicago reported the highest annual gain (+6.525%), followed by New York (+3.82%), while Seattle was the lowest annual return (-2.26%), and Denver the next worst (-1.85%).
• The competing Federal Housing Finance Agency (FHFA) House Price Index (HPI) showed US home prices declined -0.1% in April, down from the +0.1% rise the prior month (revised lower from 0.2%). The results were below Wall Street expectations to come in at +0.2%. The government data showed home prices up +2.0% year-over-year, up from the prior month’s +1.9% annual rate. House prices were up in four of the nine regions on a monthly basis, and all nine were up on an annual basis. For the nine census divisions, seasonally adjusted monthly home price changes ranged from -0.8% in the Mountain division to +1.0% in the New England division. The 12-month changes ranged from +0.2% in the Pacific division to +4.4% in the East North Central division.
• The Commerce Department reported Construction Spending for May inched up +0.1%, matching expectations, but down from +0.3% the previous month after it was revised lower from the originally reported +0.4%. On a year-over-year basis, Construction Spending was down -1.5% following a +0.9% annual rate the prior month. Total Private Construction was flat for the month following a +0.5% increase the previous month. Total Public Construction increased +0.5% for a second consecutive month. Private Residential Spending was up +0.3% after a +1.0% increase in April. Private Nonresidential Spending was down -0.3% after a -0.5% dip in April. The report showed that Public Construction spending drove the modest growth in June, while private spending was underwhelming.
• Weekly MBA Mortgage Applications were flat (0.0%) for the week ending June 26 following a +1.0% rise the prior week. The Purchase Index was up +0.5% after slipping -0.6% the prior week. The Refinance Index fell -0.7% after rising +3.0% the prior week. The average 30-Year Mortgage Rate was down two ticks to 6.57% from 6.59% the week before.
• Weekly Initial Jobless Claims fell by -1,000 to 215,000 for the week ending June 26, which was better than expectations for 218,000. The prior week was revised higher by +1,000 to 216,000. The number of people already collecting unemployment claims (i.e., Continuing Claims) rose by +2,000 to 1,814,000 for the week ending June 19, which was better than expectations for 1,815,000. The prior week’s reading was revised lower by -9,000.

Asset Class Performance

The Importance of Diversification. Diversification mitigates the risk of relying on any single investment and offers a host of long-term benefits, such as lowering portfolio volatility, improving risk-adjusted returns, and helping investments to compound more effectively.

Source: Bloomberg.
Asset‐class performance is presented by using market returns from an exchange‐traded fund (ETF) proxy that best represents its respective broad asset class. Returns shown are net of fund fees for and do not necessarily represent performance of specific mutual funds and/or exchange-traded funds recommended by The Retirement Planning Group. The performance of those funds may be substantially different from the performance of the broad asset classes and to proxy ETFs represented here. U.S. Bonds (iShares Core U.S. Aggregate Bond ETF); High‐Yield Bond (iShares iBoxx $ High Yield Corporate Bond ETF); Intl Bonds (Vanguard Total International Bond ETF); Large Growth (iShares Russell 1000 Growth ETF); Large Value (iShares Russell 1000 Value ETF); Mid Growth (iShares Russell Mid-Cap Growth ETF); Mid Value (iShares Russell Mid-Cap Value ETF); Small Growth (iShares Russell 2000 Growth ETF); Small Value (iShares Russell 2000 Value ETF); Intl Equity (iShares MSCI EAFE ETF); Emg Markets (iShares MSCI Emerging Markets ETF); and Real Estate (iShares U.S. Real Estate ETF). The return displayed as “Allocation” is a weighted average of the ETF proxies shown as represented by 24% U.S. Bonds, 10% International Bonds, 6% High Yield Bonds, 13.8% Large Growth, 13.8% Large Value, 3.6% Mid Growth, 3.6% Mid Value, 1.2% Small Growth, 1.2% Small Value, 16.8% International Stock, 4.2% Emerging Markets, 1.8% Real Estate.
* The term basis points (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01%. Bond prices and bond yields are inversely related. As the price of a bond goes up, the yield decreases.