The half closed at records and the new one opened with a rotation. Monday a weekend agreement between Washington and Tehran to cease hostilities and reopen the Strait of Hormuz sent the S&P 500 up 1.18% and the Nasdaq up 2.07%, with the Dow notching a record close. Tuesday sealed the quarter: the S&P 500 finished Q2 up 14.87%, its best quarterly performance since 2020, with the Nasdaq up 21.41% and the Dow up 12.9%, its largest gain in 14 quarters. For the half, the Dow gained 8.85%, the S&P 9.55%, and the Nasdaq 12.79%. The semiconductor index rose 88% in the quarter, the best in its history, and 101% for the half. Then the exhale: Wednesday, the first day of the second half, chipmakers sold off hard on profit-taking, with the SOX down 6.7% and memory names off around 10%, while Meta gained 9% on a report it plans to sell access to AI computing power, sending AI cloud names CoreWeave and Nebius down 14% and 17%. The Russell 2000 printed another all-time high Wednesday, its sixth straight positive session, finishing the half up more than 21%, the best first six months for small caps since 1991. Bending Spoons, the Italian owner of AOL and Vimeo, debuted on the Nasdaq at $29 and popped 42%. Thursday the June jobs report landed at 57,000 new jobs, roughly half of expectations, with unemployment ticking down to 4.2%; markets rose on the read that a cooler labor market gives the Fed room to wait on hikes. Crude drifted toward $68, down nearly 20% in two weeks. Markets were closed Friday for the Independence Day observance.
The halftime scoreboard is the story, and the breadth inside it matters more than the index numbers. The quarter began as a large-cap AI rally and ended with small caps, micro-caps, and equal-weight benchmarks at records alongside the leaders. The Russell's best first half since 1991 is the rotation thesis this desk has tracked for a month, now written into the record books. And Wednesday was the pattern in miniature: the semiconductor index fell 6.7% while the majority of S&P 500 stocks rose. Money leaving the crowded trade did not leave the market. It broadened into it.
The jobs print is the quiet macro gift for down-cap investors. Fifty-seven thousand jobs, half of expectations, with unemployment still falling, is exactly the reading that lets a hawkish Fed wait. Rate-hike odds cooled into a data-light July, and every basis point of hike risk that comes off the table is worth more to a micro-cap than to a mega-cap, because small companies live closest to the cost of capital. The caution is concentration in reverse: a chip trade that doubled in a quarter can take the whole tape down when it unwinds faster than the rotation absorbs it. The first half rewarded owning the index. The second half looks like it will reward owning the right names.
Coverage ledger: the Russell at records with breadth expanding is the most constructive micro-cap tape of the year, and it reaches the library directly. BTBT carries the AI infrastructure exposure that Wednesday repriced. CLPS trades at the kind of discount a broadening market closes. GLMD and ACON hold the cash floors that matter if the chip unwind turns into something larger. Full dossiers in the research library.