The first trading day of the second half started with a hangover. US stock markets slipped on July 1 as investors took profits in technology and semiconductor names that had powered a strong first six months, though a massive move in Meta Platforms and dovish-leaning Fed commentary kept losses from getting ugly.

The Nasdaq Composite dropped 0.66% to close at 26,040.03, dragged down by sharp declines in chipmakers. The S&P 500 edged lower by 0.22% to 7,483.23, and the Dow Jones Industrial Average barely moved, falling just 0.03% to 52,305.24 after touching an intraday high of 52,742.66.

Semiconductors crater, Meta soars

The damage was concentrated in a handful of semiconductor stocks that had been market darlings for most of the year. Micron and Sandisk both plunged more than 10% in a single session. Nvidia slipped 1%, while Broadcom fell 2%.

On the other side of the ledger sat Meta Platforms, which surged nearly 9% on the day. The catalyst was an announcement that the company plans to sell excess AI computing power through a new cloud offering, essentially turning its massive infrastructure investments into a direct revenue stream.

That one stock almost single-handedly prevented the broader tech selloff from becoming something worse. Without Meta’s contribution, the S&P 500’s decline would have been notably steeper.

The Fed factor

Federal Reserve Chair Kevin Warsh added another layer to the session’s narrative. Speaking during the trading day, Warsh acknowledged that “prices are too high” but signaled that the inflation outlook has improved since the last Federal Open Market Committee meeting.

First-half gains set the stage for profit-taking

Context matters here. The first half of 2026 was exceptionally strong for US equities. The Nasdaq gained 12.8% through June, the S&P 500 rose 9.6%, and the Dow climbed 8.9%. Those are the kinds of returns that make portfolio managers nervous about concentration risk, especially when so much of the performance was driven by AI-related names.

Early signs point toward rotation rather than broad exit. Non-tech stocks showed increased buying interest during the session, suggesting that money isn’t leaving the market entirely.

What this means for investors

The semiconductor selloff raises legitimate questions about valuation discipline in the AI trade. When stocks like Micron can drop more than 10% in a single session on what amounts to profit-taking rather than deteriorating fundamentals, it tells you the market had priced in a lot of optimism.

Meta’s cloud pivot is worth watching closely. If successful, it could reshape how investors value the company, moving it from a pure social media and advertising play into something more closely resembling a diversified technology infrastructure provider. It also signals a broader trend: tech giants looking for new ways to extract returns from their enormous AI capital expenditures, especially as the market becomes less willing to reward spending without clear monetization paths.