Alphabet Inc has replaced Verizon in the Dow Jones Industrial Average, a shift that Freedom Capital Markets Chief Market Strategist Jay Woods views as a positive update to the index's composition. Woods emphasized that Alphabet, classified as a communications stock, provides better representation of the sector and economy compared to its predecessor. The Dow Jones Industrial Average maintains a strict policy of replacing exiting members with companies from the same sector.

Verizon entered the index as a $34 stock and exited 20 years later at $41, a period Woods summarized by saying, "Thanks for the dividend. Thanks for the memories." He described the Dow Jones Industrial Average as the "premier index in the world" and affirmed that the addition of Alphabet is a beneficial change.

Looking ahead, Woods identified Nike Inc as a potential candidate for removal from the index. He stated that Nike's stock is not representative of the growing economy and is currently trading at 2017 lows. "It’s actually being left behind," Woods remarked. Replacing Nike would require selecting another consumer discretionary stock, a constraint Woods acknowledged could complicate the selection process.

Woods also discussed the possibility of SpaceX joining the index in the future. Although he does not predict an immediate addition, he noted that SpaceX is classified as an industrial and defense stock. This classification allows it to potentially replace an industrial or defense component, addressing the current lack of pure-play space companies in the index.

Despite his support for the index, Woods pointed out structural issues with its price-weighted methodology. Goldman Sachs and Caterpillar currently account for approximately 22.7% of the SPDR Dow Jones Industrial Average ETF. Woods suggested that these two companies could split their stocks two-for-one and still retain the highest weightings in the index. He recommended that the index exert pressure on these firms to split their stocks to improve diversification.

The Dow Jones Industrial Average powered to a fresh record high above 52,700 this week, capping a holiday-shortened session with gains as investors rotated out of AI capital expenditure names and into blue-chip industrials. The rally was driven by a sharply weaker-than-expected June jobs report, which pushed investors to unwind bets that the Federal Reserve would be forced to raise interest rates in the near term. Conversely, the tech-heavy Nasdaq 100 lagged, finishing down 1.9% at 29,287, dragged lower by a brutal selloff in semiconductor stocks. The S&P 500 hovered 0.3% lower at 7,466.91, weighed by its heavy technology component.

Labor Market Data and Fed Outlook

The June nonfarm payrolls print landed at just 57,000, roughly half the 113,000 consensus, while April and May figures were revised lower by a combined 74,000. The unemployment rate unexpectedly ticked down to 4.2% from 4.3%, but only because the labor-force participation rate slid to 61.5%, a low since March 2021. The soft data mattered because markets had been bracing for a possible Fed hike, not a cut, with inflation running at 4.2%. Odds of a July rate hike collapsed to roughly 20%, and traders now fully price the next hike only by December. Fed Chair Kevin Warsh added to the dovish tone at the ECB Forum in Sintra, noting that inflation expectations had eased since his swearing-in, signaling little urgency to tighten further despite warning that inflation above 2% would not be tolerated.

Sector Performance and Rotation

The Technology Select Sector SPDR Fund (NYSE: XLK) was the worst-performing sector, down 2.6%, with semiconductors at the epicenter. The iShares Semiconductor ETF (NASDAQ: SOXX) slumped over 5% for the second straight week. The other side of the ledger was led by havens and cyclicals. The Health Care Select Sector SPDR Fund (NYSE: XLV) topped the sector board, up 2.2%, and the Consumer Staples Select Sector SPDR Fund (NYSE: XLP) rose 1.7%. Gold’s bounce sent the VanEck Gold Miners ETF (NYSE: GDX) up 4.3%. The SPDR Dow Jones Industrial Average ETF (NYSE: DIA) has risen 8.77% year-to-date, slightly outperforming the SPDR S&P 500 ETF Trust (NYSE: SPY).

Major Indices Performance

The following table summarises the performance of major U.S. indices:

Top Movers and Earnings

The Russell 1000’s biggest losers were an all-semiconductor roll call. Applied Optoelectronics Inc. (NASDAQ: AAOI) tumbled 15.8%. Onto Innovation Inc. (NYSE: ONTO) fell 14.1% and FormFactor Inc. (NASDAQ: FORM) lost 13.4%. Vicor Corp. (NASDAQ: VICR) and SiTime Corp. (NASDAQ: SITM) both slid 12.6%. The winners told a defense-and-reflation story. AeroVironment Inc. (NASDAQ: AVAV) led the Russell 1000, up 11.6%, extending gains after a fiscal Q4 where revenue doubled to $642 million and backlog jumped 65%. Rivian Automotive Inc. (NASDAQ: RIVN) jumped 9.2% after delivering 12,194 vehicles in the second quarter, raising full-year 2026 delivery guidance to 65,000-70,000. Nike Inc. (NASDAQ: NKE) rallied over 7% for the week after reporting fourth-quarter revenue of $10.97 billion and an EPS beat inflated by a $986 million IEEPA tariff refund.

Commodities and Global Markets

In energy, crude eased further as the demand narrative softened. West Texas Intermediate slipped 0.8% to around $68.06 a barrel, while Brent fell 0.7% to about $71.06. Gold climbed 2.3% to about $4,124 an ounce and silver jumped 3.2% to roughly $61. Bitcoin (CRYPTO: BTC) was up 2.1% to $61,000.