U.S. stocks retreated on Wednesday as Federal Reserve Chair Kevin Warsh addressed the European Central Bank forum in Sintra, Portugal. The Dow Jones Industrial Average gave back early gains after hitting a fresh intraday record, while the S&P 500 slipped 0.2% and the Nasdaq Composite fell about 0.7%. The pullback came despite Warsh’s dovish signal that inflation risks have eased significantly in recent weeks and the central bank remains committed to price stability. His remarks led traders to modestly reduce expectations for further rate hikes, though at least one increase this year is still priced in.
Semiconductor stocks led the decline as investors took profits after a banner first half. The iShares Semiconductor ETF dropped 3.7%, with Micron down ~9% and SanDisk off ~10%. Meanwhile, software stocks surged—the iShares Expanded Tech-Software Sector ETF rose 3.6%, and Meta Platforms jumped nearly 10% on reports of a new cloud infrastructure business. Weak ADP jobs data (just 98,000 private-sector positions added in June) added to uncertainty ahead of Thursday’s nonfarm payrolls report. Oil prices fell ~1% after Iran declined direct talks with the U.S. in Qatar.
The “Great Rotation” out of tech into blue-chip names continued, pushing the Dow to an intraday record of 52,742.66 before fading. Analysts described the shift as healthy and indicative of broadening market breadth. Markets now await the official June employment data for further clues on the labor market and the Fed’s next moves.
