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AI‑linked stocks lift Palo Alto, CrowdStrike and Meta as the Dow hits a record close; Nasdaq falls 5‑6% on chip slump.
The Dow Jones Industrial Average closed Thursday at a record high after a soft jobs report cut odds of a Fed rate hike, while the Nasdaq slipped for a second day as semiconductor stocks fell 6.3% and 5.4% on Wednesday and Thursday respectively【2】.
| At a glance | |
|---|---|
| Dow close | Record high (date: July 3, 2026) |
| Nasdaq change | –5.4% (second consecutive loss) |
| PHLX Semiconductor Index | –6.3% Wed, –5.4% Thu |
| AI‑linked stocks | Palo Alto +14.5%, CrowdStrike +10.7%, Meta +8% |
Cybersecurity firms surged after a Wall Street Journal story said Chinese AI models now match U.S. tools at spotting code vulnerabilities, prompting investors to expect higher spending on security solutions【2】. Palo Alto Networks and CrowdStrike each hit all‑time highs, gaining 14.5% and 10.7% for the week. The club trimmed Palo Alto positions to lock in nearly 150% gains but kept a long‑term stake.
Meta Platforms jumped more than 8% on Wednesday after announcing plans to sell excess AI compute capacity and models to external customers, a move aimed at monetising its massive AI‑related capital outlays【2】. The proposal positions Meta against AWS, Azure and Google Cloud, though analysts note the company still must decide whether to offer raw compute or a full‑service cloud platform.
The S&P 500 finished the holiday‑shortened week essentially flat, while the Dow’s record close was buoyed by the soft jobs report that lowered expectations of a Fed rate hike this quarter【2】. By contrast, the Nasdaq’s back‑to‑back declines were driven by the semiconductor sector’s weakness, with the PHLX Semiconductor Index falling 6.3% on Wednesday and another 5.4% on Thursday.
Overall, the first half of 2026 saw the S&P 500 up 9.6% and the Nasdaq up more than 12%, while the Dow posted its strongest first‑half gain since 2021 at 8.9%【2】. Small‑cap Russell 2000 rallied nearly 22%, the biggest start‑to‑year gain since 1991.
The week underscored that investors are now parsing AI hype, rewarding firms with clear revenue pathways—cybersecurity and cloud services—while remaining cautious on hardware exposure, a split that will shape market direction as the quarter progresses.
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AI-assisted synthesis by the TrendWatcher Editorial Desk · sourced from 3 outlets · Jul 3, 2026 · How we report
The markets close on July 3 to observe Independence Day, which falls on a Saturday in 2026, and they resume trading on Monday, July 6.
The Dow Jones finished the week with a record close, the S&P 500 was roughly flat, and the Nasdaq recorded back‑to‑back losses, though all three indices ended the week higher.
By mid‑year 2026, the S&P 500 was up 9.6%, the Nasdaq more than 12%, and the Dow Jones up 8.9%.
AI‑related sectors, especially cybersecurity firms like Palo Alto Networks and CrowdStrike, saw significant gains, with some stocks reaching all‑time highs.
The Russell 2000 index surged nearly 22%, indicating strong performance for small‑cap stocks, the best start since 1991.