Wall Street looks set to kick off the start of the third quarter on a cautious note, with bond yields in focus, stocks facing big challenges, and sentiment growing wary as the buoyant spring tone shifts to a more muted outlook for the back half of the year.
Stocks closed out a stunning second quarter on Tuesday, the best in six years, with a near 15% gain for the S&P 500 and a 20% advance for the tech-focused Nasdaq. Chip stocks had their best quarter on record, while the Magnificent Seven tech giants drew back from correction territory to end the three-month window with an 11.5% leap.
Few are expecting that to continue.
With jobs data likely to indicate solid, but hardly spectacular, growth this week, and Cleveland Fed President Beth Hammack warning that the U.S. may need "higher interest rates to bring inflation back down to target" following the crude oil spike tied to the Iran war, bond yields are nudging higher and bets on a summer Fed rate hike are starting to gain traction.
The second-quarter earnings season is still looking robust, with analysts seeking a headline advance of around 24%, but the vast majority of gains will be linked to the artificial intelligence and tech trades -- both of which could be tested with higher interest rates over the coming months.
That has led to a rotation of risk appetite away from the market's key sectors to more defensive areas over the past month.
Big declines in Bitcoin, as well as the ongoing slides in gold and silver suggest some speculative money exiting markets as well.
July is normally the best month of the third quarter, but its performance is tied to early advances that fade into summer and the classic autumn lull. So the next two weeks will be crucial.
-- Martin Baccardax
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Micron and Apple Trade Blame as Device Prices Soar
The memory chip shortage remains for the foreseeable future, but Micron Technology, a leading maker of the chips, isn't taking all the blame. Choices by device makers that rely on the chips, including Apple, and the explosion of artificial intelligence have forced costs to skyrocket.
-- In addition to Micron, Korea-based Samsung and SK Hynix have been reaping the benefits while Apple and Microsoft, another device maker, are feeling the pain and raising prices. Microsoft, hiking its Xbox videogame console by up to $150, said console storage and memory prices could double by fall 2027. -- Apple CEO Tim Cook told The Wall Street Journal that pricing actions were becoming unavoidable. But Micron's Chief Business Officer Sumit Sadana tells Barron's it never had to get this bad. Purchasing decisions by tech customers in 2023 are partly to blame for current conditions. -- Memory prices crashed coming out of the pandemic, as demand for PCs and other electronics fell. Sadana says some customers used the opportunity to drive prices even lower despite Micron warning that the pricing changes would lead to shortages since it wouldn't be able to invest to bring on more supply. -- Sadana wouldn't name the customers. His comments follow the wave of high-profile price increases from HP, Dell Technologies, Nintendo, and Samsung alongside Apple and Microsoft. For now, Apple's hikes haven't included its iPhones, but the new phones coming in September are expected to cost more.
What's Next: Apple didn't respond to Barron's request for comment. Prices for its MacBooks went up by as much as 18%, while the Apple TV streaming device saw a more than 50% price hike, to $199. Micron is trying to add capacity, projecting its first new Idaho factory will begin producing memory chips in 2027.
-- Angela Palumbo
Extreme Heat Is Here. Electric Grid and Data Centers Are Feeling It.
Extreme heat will send temperatures soaring across a swath of the U.S. starting today. More than 200 million people live in areas where temperatures are expected to exceed 90 degrees. These events can be deadly. They're also increasingly seen as threats to power systems and, yes, data centers.
-- A similar heat wave in Europe already had severe impacts on power
infrastructure over the past week. France reduced output at its nuclear
reactors, from which it gets 70% of its power because the rivers where
they discharge water used to cool the reactors are already too hot,
violating environmental rules.
-- In the U.S., nuclear operators have also had to reduce output or shut
down in the past because of extreme heat. In addition, natural gas
turbines are less efficient in hot weather, according to the Pacific
Northwest National Laboratory, part of the Energy Department.
-- An unreliable electric grid is particularly problematic in the heat,
because people blast their air conditioners and cause power usage to
spike. Data centers have made the issue even more acute, and governments
are now trying to figure out what to do during extreme weather events.
-- In the PJM electric grid area, which encompasses parts of the
mid-Atlantic and Midwest, the Energy Department gave local utilities
permission to tell data centers and other large customers to use backup
generation if necessary, so other customers don't get hit with outages.
What's Next: PJM, which covers power across 13 states, thinks power use could approach record highs on Thursday. The grid operator says it has sufficient resources to serve this level of electricity use "if the generation fleet and transmission system perform as expected."
-- Avi Salzman
Strategy's Bitcoin Plan Shifts to Active Management
Strategy's playbook was simple: Sell stock, buy Bitcoin, and trade at a premium to its holdings. But under pressure, it's shifting focus, authorizing up to $1.25 billion in Bitcoin sales to bolster its $2.55 billion USD reserve, which funds annual dividend and interest obligations.
-- It's a departure from the longtime buy and hold scheme touted by Chairman
Michael Saylor, who co-founded the company in 1989 and led its
transformation from software maker into crypto whale. The price of its
preferred stock that was the primary vehicle for funding Bitcoin
purchases has fallen, stalling that funding engine.
-- While Saylor repeatedly has urged followers to "HODL," which means hold
on for dear life, Strategy has signaled that its priorities have shifted.
CEO Phong Le clarified last month that the company would sell Bitcoin
when advantageous. It's moving to active capital management, Le said on
Monday.
-- The subtext is clear: Strategy, the world's largest corporate holder of
Bitcoin, is moving beyond its identity as a mere treasury company. Its
first ever Bitcoin sale, apart from tax purposes, came in May. With
Strategy now trading at a narrow premium to its net asset value, more
sales are likely.
What's Next: As scrutiny intensifies, Strategy must convince investors that it can service its dividend payments, considering its legacy software business brings in comparatively little revenue. As of Monday, it held 847,363 Bitcoin purchased for $64.1 billion.
-- Mackenzie Tatananni
AOL (Yes, That One) Returns to Wall Street With New Name
The company that defined the early 1990s internet revolution is headed for the Nasdaq this week. Yes, AOL is returning to Wall Street. Bending Spoons, an Italian company that bought AOL in January, is on tap to begin trading today under the ticker symbol BSP.
-- It has built a digital media conglomerate through acquisitions, including
video sites Brightcove and Vimeo, ticket platform Eventbrite, and list
app Evernote. It is looking to raise nearly $1.6 billion in the stock
sale. At a $27 midpoint stock price, Bending Spoons' valuation would be
$18 billion.
-- At that market valuation, the company would be trading at seven times
trailing revenue. That's a slight premium to the trailing price-to-sales
ratio of about 6.7 for Facebook's Meta Platforms and a discount to the
more than 10 times price-to-sales ratio for Google's Alphabet.
-- AOL, of course, has been public before. The company, known for its
'You've Got Mail' dial-up announcement, debuted as a stock in 1992 (as
America Online) back when modems and instant messaging from your desktop
computer were cutting edge technologies. The company bought Time Warner
in early 2001.
-- AOL was subsequently spun off from Time Warner in 2009. It was bought by
Verizon in 2015. The telecom eventually sold AOL and other digital media
businesses (including Yahoo!) to private-equity firm Apollo Global
Management in 2021. Apollo then completed its sale of AOL to Bending
Spoons earlier this year.
What's Next: But Bending Spoons hopes it can revitalize AOL, telling investors that even more deals are likely. Bending Spoons said in its regulatory filing that it plans to favor returns over organic growth and that it is looking to bring established businesses back to start-up mode.
-- Paul R. La Monica
Dear Quentin,
Yesterday was our 39-year-old daughter's birthday. Every year, we give each of our daughters and sons-in-law $100 for their birthdays.
We also contribute $100 each month to a 529 account that we opened for our granddaughter. In addition, we provided substantial financial help for in vitro fertilization when our daughter was trying to have this baby.
Yesterday, we babysat our granddaughter while our daughter and her husband went out to lunch to celebrate her birthday.
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July 01, 2026 06:18 ET (10:18 GMT)
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