Market Minute: Dow Holds Up as Tech Leadership Narrows

As a tech selloff steams ahead, equities moved through the week with a split tape: the Dow Jones Industrial Average ($DJI) gained ground, while the S&P 500 (SPX) and Nasdaq Composite ($COMP) slipped.

On Friday, tech volatility is again on display with semiconductors under pressure. For the week, investors rotated away from mega-cap technology yet stayed firm in semiconductor and data center buildout industry groups. The CBOE Market Volatility Index (VIX) moved back above 18, while the market continued to digest the Federal Reserve’s hawkish dot plot, a stronger dollar, elevated short-term yields, and a widening split between semiconductor strength and software weakness.

Economic Data and Fed in Focus

While oil prices slipped roughly 8% on the week, the combination of 2.1% GDP, resilient income and spending, sticky PCE inflation, and low claims all point to a Fed that will maintain its higher-for-longer stance.

The latest economic data has given the Fed little reason to soften its message. May PCE, the Fed’s preferred inflation gauge, rose 0.4% month-over-month and accelerated to 4.1% year-over-year, up from 3.8% in April. Core PCE rose 0.3% on the month and 3.4% from a year ago, showing that inflation pressure was not only energy-driven but also still embedded in services. Personal income and spending each rose 0.7%, while real spending increased 0.3%, confirming that households are still spending despite higher borrowing costs.

Growth data also came in firmer than expected. The third estimate of first-quarter GDP was revised up to 2.1% from the prior 1.6% estimate, mainly reflecting a downward revision to imports. Business investment remained a key support, especially spending tied to equipment and intellectual property, reinforcing the view that infrastructure and artificial intelligence-related capital expenditures are still helping offset weakness elsewhere.

The weekly labor data continues to reaffirm that layoffs are low, and demand for labor remains relatively intact. Initial jobless claims fell to 215,000 for the week ended June 20, below expectations, while continuing claims rose to 1.821 million.

Interest rates reflect the tension between higher inflation and moderate growth tied to the consumer. The 10-year Treasury yield eased toward 4.4% as investors looked to long-duration Treasuries for safety, but 90-day and 2-year yields stayed firmer on rate-hike expectations. That flattened the yield curve and underscored long-term growth fears are building, but the front end is still pricing a Fed constrained by inflation.

Investors Defensive, Sector Rotation Shows

Sector performance showed a defensive rotation. Communication services, consumer discretionary, and technology lagged, while healthcare and utilities led as investors sought steadier cash flows. Industrials also held up as data-center buildout proxies continued to attract interest. The Dow’s relative strength came from that mix of defensive and cyclical leadership, rather than the narrow mega-cap technology trade that has carried prior rallies.

Inside technology, divergence became more obvious. Micron Technology (MU) surged after strong earnings and guidance, while Sandisk (SNDK), Western Digital (WDC), Seagate Technology (STX), Qualcomm (QCOM), and other memory or semiconductor-linked names gained ground. But software and mega-cap tech remained under pressure. Apple (AAPL) fell sharply after announcing price increases on Macs and iPads tied to higher memory costs, while Microsoft (MSFT) remained under heavy pressure trading at 52-week lows as investors questioned the timing and returns on AI spending.

What Are Currencies Saying?

The strong dollar was another headwind. The Fed’s hawkish stance and updated dot plot helped trigger a breakout in the dollar ($DXY), tightening global financial conditions and pressuring commodities, China equities, and emerging markets with dollar-denominated debt.

Bitcoin futures (/BTC) added to the risk-off tone, breaking below $60,000 on Wednesday and extending losses Thursday, nearing two consecutive closes below that key support area. Bitcoin recently traded around $58,659, reinforcing that speculative liquidity remains under pressure.

Overall, the week showed a market that is divided and is becoming even more selective.

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Data contained herein is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. All events and times listed are subject to change without notice.