Rate hike readjustment and AI hardware momentum: What to watch this week


Coming off a holiday-shortened week filled with tons of labor market data and a surprising jobs report, investors are greeted with a relatively quiet stretch in the week ahead.

Markets will pick things up after a mixed Thursday that saw an unsure market with the S&P 500 (^GSPC) closing flat, the Nasdaq (^IXIC) falling 0.8%, and the Dow (^DJI) gaining 1.1%. 

Monday is likely to be the biggest day to watch on the economic calendar, with a host of index readings from S&P Global and the Institute of Supply Management set to give investors a read on the state of the US service economy.

That data comes after the monthly private payrolls release from data provider ADP showed that the services side of the economy added the dominant count of jobs in June.

In the corporate world, reports from PepsiCo (PEP) on Thursday and Delta Air Lines (DAL) on Friday should highlight the week. PepsiCo’s results should give investors some insight into the state of the American consumer, while Delta is set to provide one more read on the lasting effects of the war in Iran and the energy crisis it kicked off.

Heading into Thursday, markets were increasingly convinced that a rate hike within the year by Kevin Warsh’s Federal Reserve was all but assured. Then came the June jobs report.

The US economy added 57,000 jobs last month, roughly half the jobs economists had expected. At the same time, May’s massive 172,000 addition was revised down to 129,000, and April’s tally was lowered to 148,000 from 179,000. Not exactly the shining example of the healthy labor market Warsh has been counting on.

While the market continued to fully price in one Fed rate hike this year following the report, markets pulled back slightly on their conviction. On Thursday morning, traders assigned roughly 75% odds that rates would end the year higher than they are now, per CME data. On Wednesday, those odds stood at roughly 84%.

In his first post-Fed decision press conference, Chairman Kevin Warsh focused heavily on inflation and his goal to get it back to the Fed’s 2% target rate, which has remained elusive amid the energy shock of the Iran war.

While June’s employment data was weaker, many economists believe inflation and unemployment may not be particularly linked at the moment, keeping the pressure firmly on price data — something to keep in mind as earnings season approaches.

CARSON, CALIFORNIA - JUNE 30: Job seekers meet with recruiters during the HIRE360 Diversity Hiring Expo & Mega Career Expo at the Carson Event Center on June 30, 2026, in Carson, California.  (Photo by Justin Sullivan/Getty Images)
Job seekers meet with recruiters during the HIRE360 Diversity Hiring Expo & Mega Career Expo at the Carson Event Center on June 30, 2026, in Carson, California. (Justin Sullivan/Getty Images) · Justin Sullivan via Getty Images

The first-half AI story was all about hardware

The tech trade through the first half of 2026 was, in a word, imbalanced.



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