US Stock Market: Wall Street eyes jobs data as rate hike bets and tech volatility intensify

US stock investors are set to closely monitor this week's employment data for fresh clues on the strength of the economy and the likely path of interest rates, with the outcome expected to influence market sentiment already unsettled by sharp swings in technology stocks.

Wall Street's major indexes are on track to end the first half of 2026 with healthy gains, led by the benchmark S&P 500, which has risen more than 7% so far this year. However, market momentum has weakened in June as investors reassess lofty valuations in technology stocks, particularly semiconductor companies that have been at the forefront of the artificial intelligence-driven rally.

According to Reuters, investors believe Thursday's U.S. non-farm payrolls report could play a pivotal role in shaping expectations for the Federal Reserve's next policy move. Financial markets in the U.S. will remain closed on Friday for the Independence Day holiday.


The focus on jobs data has intensified after the Federal Reserve signalled at its latest meeting that policymakers remain firmly committed to containing inflation. Stronger-than-expected hiring could reinforce expectations that interest rates may remain higher for longer or even increase further in the coming months.

Technology stocks, especially chipmakers, are expected to remain under the spotlight. The Philadelphia Semiconductor Index has surged about 85% since the market's late-March low, although it retreated this week as investors questioned whether the rally had become overheated. Strong quarterly results from memory chipmaker Micron Technology provided some support to the sector, but the tech-heavy Nasdaq Composite still posted a weekly decline of more than 4%.

Market participants are also assessing whether higher interest rates could weigh on the semiconductor sector, which has been one of the biggest beneficiaries of enthusiasm surrounding artificial intelligence.

According to a Reuters poll, U.S. employers are expected to have added about 110,000 jobs in June, following a gain of 172,000 in May. While hiring is projected to moderate, inflationary pressures remain elevated. Recent data showed U.S. inflation climbing above 4% for the first time in three years, driven in part by higher energy prices following tensions in the Middle East.

The combination of persistent inflation and resilient labour market conditions has prompted investors to reassess the outlook for monetary policy. Futures markets currently indicate that traders see better-than-even odds of a Federal Reserve rate hike by its September meeting, marking a sharp shift from expectations earlier this year when markets anticipated rate cuts before year-end.

Higher borrowing costs could create headwinds for equities by increasing financing costs for businesses and consumers while slowing overall economic activity.

Beyond economic data, investors will also watch quarterly results from sportswear company Nike ahead of the broader second-quarter earnings season, which begins later in July.

Geopolitical developments in the Middle East will remain another key factor for markets. Oil prices have retreated to around $70 per barrel from nearly $100 a month ago after a ceasefire eased concerns over supply disruptions, helping reduce some inflation worries. According to Reuters, investors will continue evaluating whether the truce holds, as any renewed escalation could quickly revive pressure on energy prices and inflation expectations.