The major averages finished little changed today as strength across software and several other pockets of the market helped offset another sharp pullback in semiconductor stocks. The S&P 500 (-0.1%), Nasdaq Composite (-0.2%), and DJIA (-0.1%) all ended with modest losses, reflecting a market that remained selective rather than broadly risk-averse.

Technology was once again defined by a notable divergence beneath the surface. Chipmakers came under renewed pressure after The New York Times reported that OpenAI may delay its planned IPO until 2027 following SpaceX's (SPCX 153.23, +0.23, +0.15%) disappointing post-IPO performance, prompting investors to continue reducing exposure to AI infrastructure names.

The PHLX Semiconductor Index fell 5.3%, with memory names such as Sandisk (SNDK 2090.71, -244.29, -10.46%) giving back a portion of yesterday's post-Micron (MU 1132.33, -81.23, -6.69%) earnings gains. Company-specific developments added to the weakness. onsemi (ON 90.65, -28.09, -23.66%) was the S&P 500's biggest laggard after announcing a $7 billion all-stock acquisition of Synaptics (SYNA 121.00, -4.62, -3.68%), as investors weighed the strategic merits of the transaction against the near-term dilution associated with an all-stock deal.

Despite the pressure on chipmakers, the broader technology complex delivered a much more mixed performance. Software stocks emerged as a notable area of strength, with ServiceNow (NOW 98.34, +8.82, +9.85%) surging 9.0% and helping lift the iShares Expanded Tech-Software Sector ETF (IGV) 4.1% higher.

Apple (AAPL 283.78, +8.63, +3.14%) and Microsoft (MSFT 372.97, +20.14, +5.71%) also rebounded from yesterday's declines, leaving the Vanguard Mega Cap Growth ETF flat for the day even as the information technology sector (-1.1%) finished as one of the weakest S&P 500 sectors.

The industrials sector (-1.5%) also lagged as electrical equipment names continued to trade in sympathy with semiconductor stocks. FedEx Freight (FDXF 153.89, -4.64, -2.93%) added to the weakness after investors responded cautiously to the company's first earnings report as a standalone company.

Away from technology, market participation remained constructive. Six S&P 500 sectors finished higher, led by the health care sector (+3.2%), where Eli Lilly (LLY 1206.50, +78.82, +6.99%) traded sharply higher and Moderna (MRNA 67.27, +7.52, +12.59%) finished as the top-performing S&P 500 component after unveiling research and early development updates during its Science Day event.

The defensive consumer staples sector (+1.0%) and utilities sector (+0.8%) also emphasized strength across more defensive sectors, while gains across several large consumer names helped the consumer discretionary sector (+1.6%) finish among the session's leaders.

Outside the S&P 500, the Russell 2000 (+0.1%) and S&P Mid Cap 400 (-0.2%) also finished little changed, indicating that rotational buying was somewhat less pronounced than in recent sessions.

On the policy front, Minneapolis Fed President Kashkari, a voting member of the FOMC, told CNBC that he currently has one rate hike penciled in for 2026, though he emphasized that future policy decisions will remain dependent on incoming economic data.

Overall, today's session reinforced that investors continue to distinguish between individual areas of technology rather than treating the sector as a single trade. While AI infrastructure names remained under pressure, resilience across software, select mega-cap technology stocks, and several non-technology sectors helped keep the broader market stable.

U.S. Treasuries had a mixed finish to the week, as 10s and shorter tenors recorded their fourth day of gains in a row while the long bond underperformed, finishing with a slim loss. The 2-year note yield settled down three basis points (-9 basis points this week), and the 10-year note yield settled down two basis points to 4.37% (-8 basis points this week).

• Russell 2000: +21.3% YTD
• S&P Mid Cap 400: +15.5% YTD
• Nasdaq Composite: +8.8% YTD
• DJIA: +7.9% YTD
• S&P 500: +7.4% YTD

Reviewing today's data:

• May Adv. Intl. Trade in Goods -$105.8 bln; Prior was revised to -$83.0 bln from -$82.4 bln
• May Adv. Retail Inventories 0.6%; Prior 0.7%
• May Adv. Wholesale Inventories 0.3%; Prior was revised to 0.7% from 0.5%
• June Univ. of Michigan Consumer Sentiment - Final 49.5 (Briefing.com consensus 48.9); Prior 48.9
  • The key takeaway from the report is that sentiment was boosted by the moderation in gas prices; however, the higher cost of living in general remains a burden, as sentiment is still 13% below the level it stood at in February prior to the start of the Iran War and almost 20% less than the prior year period.