Major Indexes Show Mixed Performance as Sector Rotation Continues
The stock market opened with mixed results on Wednesday, July 2, 2025, as investors continued their rotation away from high-flying technology stocks that dominated the second quarter rally. At the opening bell, the Dow Jones Industrial Average gained 0.2%, adding approximately 70 points to reach 44,565, building on yesterday’s 400-point advance. Meanwhile, the S&P 500 edged up just 0.1% to 6,204, while the tech-heavy Nasdaq Composite remained flat at the market open.
“We’re seeing a clear shift in investor sentiment at today’s market open, with money flowing from growth-oriented technology names into more cyclical and value sectors,” said Jose Rasco, HSBC Global Private Banking and Wealth Management Americas CIO.
This sector rotation comes as the market begins the second half of 2025 with investors reassessing their portfolios. The blue-chip Dow has been the primary beneficiary of this shift, now sitting just 1.3% below its all-time high recorded in December 2024.
Economic Data and Policy Developments in Focus
Market participants are closely monitoring several key economic developments today. The ADP private payrolls report released this morning showed private employers added 120,000 jobs in June, a significant improvement from May’s gain of just 37,000 jobs.
Investors are also watching developments related to President Donald Trump’s tax and spending bill, which narrowly passed the Senate on Tuesday and now returns to the House where some GOP lawmakers remain holdouts.
Additionally, traders are monitoring progress on trade deals as Trump’s 90-day pause on his sharpest tariffs is set to expire next week, creating potential volatility in both equity and fixed income markets.
Major Stock Movers at the Market Open
Several notable stocks are making significant moves at today’s market open:
Tesla (TSLA) shares dropped nearly 5% in early trading, continuing yesterday’s decline as tensions between CEO Elon Musk and President Trump escalated. Musk criticized the budget bill, prompting Trump to respond that the Tesla chief had benefited excessively from government subsidies.
Nvidia (NVDA) shares fell about 2.9% at the opening bell, despite recent analyst optimism. William Stein at Truist Financial recently set a target price of $210 per share for Nvidia, implying 33% upside and a potential $5.1 trillion market value.
Microsoft (MSFT) declined 1% to $492.31 as tech stocks broadly retreated. However, Wedbush analyst Dan Ives recently predicted Microsoft could reach a $5 trillion market cap within 18 months, implying a share price of $690.
Apple (AAPL) bucked the tech selloff trend, rising 1.4% to $207.94 at the market open.
Alphabet (GOOGL) shares were relatively stable, declining just 0.2% to $175.84 in early trading.
In the healthcare sector, gains in Amgen, Johnson & Johnson, and UnitedHealth helped lift the Dow Jones Industrial Average, as investors rotated into defensive names.
Unifirst Corporation (UNF) is in focus today as it reports quarterly earnings. Analysts expect earnings per share of $2.12 for the quarter ending May 31, 2025, representing a 3.20% decrease compared to the same quarter last year.
Market Breadth and Sector Performance
The market’s breadth shows a clear sector rotation at today’s open. Nine out of eleven S&P 500 sectors are trading in positive territory, with only two in negative territory. The Technology Select Sector SPDR (XLK) is among the weakest performers, continuing yesterday’s 0.9% decline.
Conversely, defensive and value sectors are showing strength at the market open. The Consumer Staples Select Sector SPDR (XLP), Materials Select Sector SPDR (XLB), and Health Care Select Sector SPDR (XLV) are building on yesterday’s gains of 1.3%, 2.6%, and 1.4%, respectively.
“What we’re seeing at today’s market open is a continuation of the sector rotation that began yesterday, with investors taking profits in technology and reallocating to more defensive and value-oriented sectors,” said a market strategist at the opening bell.
Looking Ahead: Key Events to Watch
As markets today digest the ADP employment data, all eyes are now turning to Thursday’s comprehensive jobs report. This holiday-shortened week (with markets closed Friday for Independence Day) will see the release of this crucial economic indicator that could significantly impact Federal Reserve policy decisions.
Short sellers have lost $300 billion or 22% since the stock market bottom on April 8, according to S3 Partners. Over the same period, the S&P 500 and Russell 3000 indexes have each risen 24%, while the Nasdaq Composite is higher by 33%.
The CBOE Volatility Index (VIX), often referred to as the market’s “fear gauge,” remains relatively subdued at 16.83, indicating moderate investor concern despite the ongoing sector rotation and policy uncertainties.
Market Outlook and Analyst Perspectives
Market analysts remain cautiously optimistic about the second half of 2025, despite the current rotation away from technology stocks at today’s market open.
“We expect to see more volatility in fixed income, even once they get the bill passed, whatever that looks like,” said Jose Rasco of HSBC. “That’s going to bleed over into the equity markets.” However, he added that this turbulence is likely to be short-lived. “Once these things get resolved and once the Federal Reserve gets back in gear, there’s a lot of upside here.”
The 10-year Treasury yield, which affects borrowing costs on various loans including mortgages, stood at 4.24% at the market open, slightly up from yesterday’s close of 4.23%, which was its lowest level since early May.
As trading continues today, market participants will be closely monitoring sector rotations, economic data releases, and developments in Washington regarding both fiscal policy and international trade agreements. The market’s performance at today’s open suggests investors are repositioning their portfolios for what could be a more volatile but potentially rewarding second half of 2025.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.