Starting Finance Club Cassino
Part of the Starting Finance network
This report is prepared for educational purposes and does not constitute investment advice.
June 29 – July 2, 2026: Wall Street books its best quarter since 2020, then sells the very stocks that built it. An Italian IPO pops, and soft jobs data kills July hike bets
Tuesday, June 30 brought the curtain down on the first half: S&P 500 +9.6%, Nasdaq +12.8%, and for the Dow, which posted its second consecutive record on Tuesday, a +8.9% that marks its best first half since 2021. Small caps did even better, with the Russell 2000 up nearly 22%. The second quarter alone was Wall Street’s best since 2020, driven by AI and semiconductors, with the chip index up more than 80% year-to-date.
| Index | H1 2026 | Note |
|---|---|---|
| S&P 500 | +9.6% | Best quarter since 2020 in Q2 |
| Nasdaq Composite | +12.8% | AI and chips led the advance |
| Dow Jones | +8.9% | Best first half since 2021, record close June 30 |
| Russell 2000 | ~+22% | Small-cap rotation accelerating |
On the first day of the new half, Wall Street took profits exactly where it had made them: Micron -10.6% (still +260% year-to-date), Sandisk -10.6%, Applied Materials -10%, Intel -9%, AMD -6.9%. The Dow touched an intraday record at 52,742 and closed flat; the Nasdaq gave up 0.66%.
The real shock came from Meta: according to Bloomberg, the company is preparing “Meta Compute”, a cloud business to sell its excess AI computing capacity to third parties. Meta stock jumped 8.8%, but compute providers cratered: CoreWeave -14%, Nebius -17%. When your biggest customer becomes your competitor, the market reprices fast.
Against the tide: Bending Spoons, the Italian owner of AOL, Evernote and Vimeo, priced its IPO at $29 and closed its first session at $40.50, up 39.7%, for a market cap of roughly $25 billion. We covered the full story in our dedicated report.
The June employment report, released Thursday ahead of the July 4 holiday, disappointed: +57,000 payrolls against expectations of 110-115,000, with -74,000 of downward revisions to the prior two months. The unemployment rate fell to 4.2%, but for the wrong reason: labor force participation dropped to 61.5%, the lowest since March 2021. Futures rose and yields fell: a lukewarm labor market takes pressure off a Fed tempted to hike.
Before the report, markets assigned roughly a 30% probability to a rate hike as early as July. After it, those bets were wiped to zero: the 2-year Treasury yield, the most policy-sensitive point on the curve, fell 3.5 basis points to 4.13%. Still, the picture for Kevin Warsh’s Fed remains uncomfortable: on Wednesday the Chair had called the labor market “steady” and reiterated that the priority is bringing inflation, above target for five years and reignited this year by the Iran conflict and tariffs, back to 2%. Wages rose a stable 3.5% year over year. The next watershed is the June CPI on July 14.
Not even the World Cup helped: Goldman Sachs had estimated up to 40,000 tournament-related hires, but leisure and hospitality lost 61,000 jobs in the month.
A lively week for Italian government bonds too: on Tuesday the BTP-Bund spread dropped to 69 basis points, below 70 for the first time since the start of the Iran war, before rebounding to 78 on Wednesday with the 10-year yield at 3.67%. Small moves in absolute terms, but a reminder that the European bond market stays sensitive to every shift in mood on inflation and the ECB. On the energy front, oil extended its decline: WTI back below $70, at pre-conflict levels, easing cost-push inflation expectations.
Friday, July 3: US markets closed for Independence Day; the week restarts Monday, July 6.
July 14: US June CPI, the real arbiter between a Fed on hold and a Fed that hikes.
Mid-July: Q2 earnings season kicks off, with the big banks first up.
Semiconductors: after Wednesday’s -10% moves, the market decides whether this is rotation or reversal.
Week 27 compressed the whole 2026 story into four sessions: a historic rally built on AI, the first cracks of profit-taking in the very sector that built it, a new competitive threat from a hyperscaler, and a labor market soft enough to sideline the hawks without alarming anyone. After the best quarter since 2020, the question for every portfolio is the same one Wall Street asked itself on Wednesday: ride the rally, or start taking profits like the market just did with chips?
Starting Finance Club Cassino
Part of the Starting Finance network
This report is prepared for educational purposes and does not constitute investment advice.