Soft jobs spark a rotation: tech stumbles, defensives surge

It probably felt a bit whiplash-y today: your feeds are full of “weak jobs report,” chip stocks are getting hit again, yet the Dow is green and the overall market doesn’t look like it’s crashing. Here’s what actually happened.

1. Jobs came in soft, and that re-shaped the mood

Today was “Jobs Day” a day early because of the holiday. The U.S. added 57,000 jobs in June, roughly half of what economists were looking for, while the unemployment rate dipped to 4.2% and wages grew at a steady 3.5% year over year.

On paper, that’s a cooling job market, not a crisis. Several commentators called the report “weak” or “noisy,” but also said it doesn’t scream recession. The key takeaway for markets: softer jobs make it less likely the Federal Reserve hikes rates again soon, which is generally friendlier for stocks and bonds.

You can see that in bonds and rates: volatility there is calm, the yield curve is in a “normal” shape, and credit spreads (a risk gauge in corporate bonds) are near decade lows, which signals investors aren’t suddenly panicking about defaults.

2. The real story was a big rotation inside the market

Index headlines hide the drama. The S&P 500 was basically flat and the Nasdaq fell less than 1%, but under the surface money moved hard from “hot” to “safe.”

• Technology was hammered (sector down about 2.7%), especially chips: Micron, AMD, Intel and others dropped sharply, and Tesla and Meta sold off too. Options data shows more investors buying puts, which are basically insurance against stock drops, as enthusiasm for the AI trade cools.
• Classic “boring” areas ripped higher: healthcare, utilities, consumer staples, financials, and basic materials all had strong days. Low-volatility and value styles were up nicely while growth, high-beta, and momentum got hit.

That’s textbook rotation: not money fleeing the market, but money leaving the crowded, story-driven names and parking in steadier, dividend-heavy, less volatile ones. An AAII survey backs the vibe shift — bullish sentiment dropped sharply, and more investors now describe themselves as neutral.

3. What this changes for near-term risk

Volatility remains low (the VIX is subdued), but dispersion — how differently individual stocks move — is high. In practical terms, the market overall may look calm while your specific tech holdings feel rough.