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Markets saw a movement away from the tech sector, which had previously dominated the recovery of U.S. equities. In foreign exchange markets the U.S. dollar maintained its current downward trajectory, while the euro strengthened. Both factors have been driving investors toward European stocks.
The Dow Jones rose 396 points, for a 1% gain, on Tuesday, as investors mostly rotated out of the tech sector. That shift favored the 30-company Dow Jones, which is a 1% off its all-time high reached in December 2024. Meanwhile the S&P 500 fell 0.11% and the Nasdaq dropped 0.83%. Several of the tech giants saw their share prices fall. Nvidia closed down 3%; Microsoft declined 1.1%; and Meta ended the day 2.6% below where it opened.
Tesla had the steepest drop, closing at $302 a share, 5.3% lower than at the start of the session, though some of that fall may be attributed to chief executive Elon Musk’s renewed feud with President Donald Trump. Across the pond, European markets came into focus on Tuesday after reports of investors shifting money into the continent intensified. However, stocks in the European Union tumbled on the day. The Stoxx 600 dropped 0.2% after a turbulent few days in which the index had multiple peaks and valleys. The German DAX spent the entire session in a negative slide, closing down 1%.
The French CAC closed slightly lower, down four basis points for the day. There was a regional bright spot in the United Kingdom where the FTSE 100 rose 0.3% In currency markets the U.S. dollar index (DXY) was essentially flat on the day, after surging in the morning. On Tuesday the DXY was down 0.1%, hovering around $96.76. That comes after the U.S.
dollar had its worst performance in the first half of a calendar year since 1973. Since the start of the year the U.S. dollar declined 11% against a basket of similar currencies. The ongoing weakness in the dollar reflects the sense of uncertainty that has pervaded the economy in the last few months. But the dollar’s slide has been the euro’s rally.
The euro is up just under 14% so far year-to-date against the dollar. On Tuesday, the euro spiked in the morning hours, going as high as $1.1832, before falling back down to $1.1765 in the mid-afternoon. European Central Bank president Christine Lagarde called the exchange rate “a reflection of the strength of our economy” during the ECB Forum in Sintra, Portugal on Tuesday. “There has been a clear appreciation relative to the dollar,” she said on a panel with other central bankers, including Federal Reserve chair Jerome Powell. “Depending on how you look at it, it’s either depreciation of the dollar or appreciation of the euro, and there might be a bit of both.” Story Continues As the euro and the dollar move in opposite directions, investors have started rebalancing their portfolios toward European equities.
The combination of greater stability in Europe, appreciation of the euro, and increased levels of defense spending have combined to make the European Union a more appealing destination for investors than it had been in recent years. “In that particular case, we’re also looking at the movement, the flow of capitals and the attractiveness of euro-denominated assets, which is also an interesting phenomena that we’ve observed lately,” Lagarde said. This story was originally featured on Fortune.com View Comments
Dow soars almost 400 points as investors rotate out of tech and eye Europe
July 01, 2025 01:06 PM PDT | By EODHD
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