Morning in New York: A solid report from the Department of Labor will boost the bulls

A daily review and forecast of events in the U.S. stock market by Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

The main event of the day will be the June labor market data. The consensus forecast calls for 115,000 new nonfarm jobs, following 172,000 the previous month, private-sector employment growth of 118,000 following 120,000 in May, the unemployment rate holding steady at 4.3%, and average hourly earnings rising by 0.3% month-over-month. Freedom Broker’s forecasts assume an increase in private-sector jobs of only about 80,000. At the same time, we cannot rule out that growth in temporary hiring related to the World Cup could cause actual figures to exceed both our expectations and market consensus. In this regard, wage growth will become a more important indicator. If wage growth accelerates to 0.4–0.5% MoM, concerns about rising inflation will intensify, as will the likelihood of the Fed tightening policy. This would put pressure on stocks and Treasury bonds. An increase in employment without sharp fluctuations, coupled with moderate wage inflation, would be viewed positively by the market, as it would reduce the risks of further rate hikes.

Data on industrial orders for May will also be released (consensus: -2%, April: +4.8%), final estimates for durable goods orders (consensus: -4.5%) and core capital goods excluding aircraft and defense products (consensus: +1.6%). These releases will have a minor impact on today’s trading activity.

The U.S. and Iran have made progress on issues related to shipping in the Strait of Hormuz, although they have not yet reached a long-term agreement. Against this backdrop, Brent and WTI are down by about 1%. The correction in oil prices is also being driven by expectations that OPEC+ will increase production quotas starting in August. Lower energy prices are easing inflationary risks and supporting consumer and transportation companies. The next round of U.S.-Iran talks is scheduled to take place after the funeral of Ayatollah Ali Khamenei on July 9.

U.S. index futures are trading nearly flat amid a correction in chipmaker stocks. We assess the risk balance for the upcoming session as neutral, with elevated volatility.

— Shares of Samsung Electronics and SK Hynix plummeted by 9.1% and 14.6%, respectively, at the close of trading on July 2. Against this backdrop, South Korea’s main stock index, the KOSPI, plunged by nearly 8%. The sell-off reflects profit-taking following a record second quarter for the semiconductor industry. This creates the risk of a sell-off in shares of Micron (MU), SanDisk (SNDK), and other memory chip suppliers during the U.S. trading session. Please note that a drop in MU shares below the $1,000 mark could trigger numerous stop-loss orders, which would intensify pressure on the stock.

— SurgePays (SURG) shares soared 61% following news of a revision to its agreement with AT&T Mobility. The amendments cancel the remaining minimum purchase obligations totaling $50 million. AT&T will also write off approximately $10.3 million in previously accrued payments, which will provide SurgePays with one-time revenue of about $8.5 million in the second quarter. Investors are responding positively to the significant reduction in obligations and the prospect of improved margins thanks to more favorable wholesale rates.

— National Beverage (FIZZ) shares are up 6% following the release of its annual results and the announcement of a special dividend of $3.25 per share. This will yield a return of approximately 10.5% based on the most recent closing price. In fiscal year 2026, the company’s revenue declined from $1.2 billion to $1.18 billion, diluted earnings per share fell from $1.99 to $1.96, the gross margin remained at 37%, and cash balances rose to $350 million. The market’s positive reaction to the earnings release is primarily due to the significant return of capital and strong cash flow.

— Franklin Covey (FC) shares fell 18% as its quarterly revenue rose by only 1% to $67.8 million, falling slightly short of consensus estimates, while earnings per share, in line with average estimates, came in at $0.27, with adjusted EBITDA rising 14% to $8.3 million. Pressure on the company’s market capitalization came from a downward revision of its full-year revenue forecast from $265–275 million to $260–267 million, which heightened concerns about weak growth rates despite improved profitability.

Trading on July 1 on U.S. stock markets ended in negative territory. The S&P 500 fell 0.22%, the Nasdaq 100 dropped 1.54%, the Russell 2000 declined 0.39%, and the Dow Jones lost a symbolic 0.03%.

The session was marked by widespread profit-taking in semiconductor stocks following their record rally in the second quarter. This led to a significant flow of capital into other sectors of the broader market. As a result, the S&P 500 balanced index hit a new all-time high. Most of the “Magnificent Seven” closed in positive territory. Meta Platforms (META: +8.8%) was the most sought-after stock among buyers following reports of plans to monetize excess computing capacity. However, due to the aforementioned sell-off in chipmaker stocks, the IT sector (XLK: -2.57%) ended up as the day’s underperformer. Driven by an influx of investor funds, telecommunications (XLC: +2.44%) and financial companies (XLF: +2.18%) emerged as the top performers.

The macroeconomic data released pointed to an economic slowdown and easing inflationary pressures. The ISM’s June Purchasing Managers’ Index (PMI) for the manufacturing sector fell from 54 to 53.3 points, in line with consensus estimates. The market reacted positively to the sharp drop in the subcomponent tracking paid prices. According to the ADP report, private-sector payrolls rose by only 98,000 in June, compared with a forecast of 113,000 and a May reading of 122,000. The bond market reacted to the macroeconomic data and the rotation in equities with a moderate decline: Treasury yields rose by 2–4 basis points, and the yield curve steepened.

Speaking at the ECB forum in Sintra, Portugal, Fed Chair Kevin Warsh noted that inflation expectations and risks have declined in recent weeks. As expected, the speaker refrained from providing forward guidance on the future path of the benchmark interest rate. He also announced the appointment of former Bank of England Governor Mervyn King as head of the Fed’s new task force on communications.

Commodity markets reacted to foreign policy news. WTI crude oil futures fell 1.3% amid reports of constructive talks between the U.S. and Iran in Doha regarding commercial shipping in the Strait of Hormuz.

— Meta Platforms (META: +8.8%) announced plans to establish a cloud division to sell excess computing capacity. This will allow the company to effectively monetize its massive investments in AI infrastructure and compete directly with Nebius (NBIS: -17%) and CoreWeave (CRWV: -13.9%).

— Microsoft (MSFT: +3%) may announce next week that it is cutting approximately 2.5% of its workforce due to a significant increase in capital expenditures on neural networks. Investors viewed this insider information as a timely and sensible step to control costs.

— Shutterstock (SSTK: -29%) has abandoned its merger with rival Getty Images due to strong opposition to the deal from U.K. antitrust regulators. The massive sell-off was triggered by the loss of the takeover premium that investors had anticipated.

— General Mills (GIS: +8.5%) reported strong results for its fourth fiscal quarter. Despite a lack of organic sales growth due to pressure on consumer budgets, the company managed to significantly improve its margins thanks to a sound pricing strategy, improvements in its product mix, and the announcement of new programs to reduce operating costs.

— Alcoa (AA: -8.9%) announced its intention to acquire the alumina and bauxite assets of Australia’s South32 for between $4.1 and $4.8 billion in a cash-and-stock deal. This plan has raised legitimate concerns among investors regarding the impending dilution of shareholder equity and an increase in the aluminum giant’s debt burden.

This article was AI-translated and verified by a human editor