The ruckus in large-cap tech shares weighed on the S&P 500 (SPX) and the Nasdaq-100 (NDX), which dropped 1.95% and 4.24%, respectively, for the week. Meanwhile, the less tech-exposed Dow Jones Industrial Average (DJIA) climbed 0.60%. However, that insulation from tech-driven volatility is gradually coming off as the index adds Alphabet (GOOGL), which will join Microsoft (MSFT), Apple (AAPL), Amazon (AMZN), and Nvidia (NVDA) in its blue-chip ranks, raising the DJIA’s broad tech and AI exposure to the vicinity of 25%.
On Main Street, incoming economic data continues to support the resilient economy thesis, with the sharp downward reversal in crude prices now offering tangible relief to households. The Federal Reserve’s preferred inflation gauge, Core PCE, while still elevated, came in squarely in line with expectations for both the first quarter and May. However, long-term inflation expectations continue to inch downward, helping the University of Michigan’s consumer sentiment index climb from its May lows.
The jobless claims data continues to show that the labor market is chugging along, with a strong private-sector wage increase underscoring its resilience amid headlines fearmongering an AI job apocalypse. At the same time, preliminary June PMIs came in better than expected, with both services and manufacturing firmly in expansion territory – signaling that elevated energy prices in previous months did not derail economic activity. That takeaway was confirmed by the final reading on Q1 GDP growth, which arrived at a 2.1% annualized rate – well above earlier estimates.
