The Labor Department reported on Thursday that U.S. employers added just 57,000 jobs in June, well short of the roughly 115,000 economists had expected, while May’s gain was revised down to 129,000 and the unemployment rate slipped to 4.2%. On an ordinary day, a hiring miss that large would knock stocks lower. Instead, the Dow Jones Industrial Average pushed to a fresh record high ahead of the July 4 holiday, and Wall Street barely blinked.

That reaction has become the defining habit of 2026. One shock after another — a soft labor report, a war in the Middle East, a sudden sell-off in chip stocks — keeps landing, and the market keeps shrugging it off and grinding higher. As the second half of the year begins, the biggest banks are now telling clients to expect more of the same.

Goldman Sachs is among the most confident. Strategist Ben Snider raised the firm’s year-end target for the S&P 500 to 8,000 from 7,600, roughly 7% above where the index trades now. His team lifted its earnings forecast to $340 per share for 2026, a 24% jump from last year, and to $385 for 2027. Snider expects companies tied to artificial intelligence spending to account for about half of that profit growth.

Goldman is not alone. Deutsche Bank also carries an 8,000 target for the index, and Morgan Stanley sits in the same camp of firms projecting a 17% full-year gain. The common thread in their notes is that corporate earnings, not cheap money, are powering this rally — a point that matters for anyone whose retirement savings or pension is tied to these benchmarks.

The first-half scorecard explains the confidence. Over the six months through June, the Dow climbed 8.9%, its best start to a year since 2021. The broad S&P 500 rose 9.6%, the tech-heavy Nasdaq Composite gained 12.8%, and the small-cap Russell 2000 surged nearly 22% — its strongest first half since 1991. The S&P 500 also posted its best quarter since 2020.

The engine has been artificial intelligence. Semiconductor stocks jumped more than 80% in the first half, with Micron up more than 260% for the year. But the run has grown wobbly. In late June and early July, investors began cashing out of the highest fliers. Micron and Sandisk each fell more than 10% in a single session, Applied Materials slid sharply, and Caterpillar, an AI-infrastructure winner, pulled back almost 7%.

That rotation is why Thursday’s record on the Dow leaned on steadier names. Apple and Microsoft did much of the lifting, and defensive corners of the market — utilities, health care, and consumer staples — outperformed as money moved out of technology. It is a quieter, more cautious version of the same bull market, but a bull market still.

The Federal Reserve backdrop helps explain why weak jobs numbers no longer scare investors. Federal Reserve Chairman Kevin Warsh, speaking Wednesday at a European Central Bank conference in Portugal, said inflation risks have eased substantially, though he cautioned that “prices are too high.” With hiring cooling, traders are reading the data as a reason for the Fed to hold rates steady or cut them, rather than raise them — an outcome the market prefers.

Not everyone is convinced the good times can last. Stock valuations sit near record highs by some measures, and skeptics warn the AI boom echoes the dot-com bubble of the late 1990s. Christopher Harvey, chief equity strategist at CIBC Capital Markets, sees a more modest gain of about 8.8% this year and points to strains in credit markets and doubts about whether AI spending will ever pay off. Bank of America is more cautious still, with a target closer to 7,100. Their warning is simple: the bet only works if corporate earnings keep beating expectations. If profits disappoint, richly priced stocks have little cushion.

Geopolitics remains the wild card. U.S. and Iranian officials resumed talks in Doha this week, and President Donald Trump told reporters that progress toward Iranian denuclearization was “moving along well.” Oil settled around $69 a barrel for WTI crude, easing back toward pre-war levels — a relief for consumers and for companies that depend on fuel and shipping costs.

U.S. markets were closed Friday, July 3, for Independence Day and reopen Monday. The real test of Wall Street’s conviction arrives with second-quarter earnings season, which kicks off in mid-July. If corporate America delivers the profits the bulls are counting on, the path toward 8,000 stays open. If it stumbles, the market’s long streak of shrugging off bad news may finally be put to the test.

JBizNews Desk | New York
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