About 72% of S&P 500 stocks now trade above their 200-day moving average, the strongest market breadth since December 2024, according to data from Barchart. The benchmark index is holding near record highs even as semiconductor stocks such as Sandisk and Micron sell off, with investors rotating out of AI bets into software, financials and other sectors.
About 72% of S&P 500 stocks are now trading above their 200-day moving average, the strongest market breadth since December 2024, according to data from Barchart. The index is also holding near record highs while semiconductor stocks such as Sandisk and Micron get hit.
Schwab strategist reads the tape as rotational
Charles Schwab strategist Kevin Gordon said on Yahoo Finance's Opening Bid that roughly two-thirds of S&P 500 companies trading above that level is a healthy sign. According to Gordon: "That's relatively healthy and still consistent with the market that is more rotational in nature" and not necessarily one that is correctional.
Money moves from AI trades into value
Investors have cashed in their AI bets and rotated into software, financials, industrials, healthcare, and consumer discretionary stocks for their perceived values. A strong earnings season from many companies, like Coca-Cola on Tuesday, has helped offset the negative tones stemming from reports out of Alphabet and Tesla.
Resilient economic data has also supported the market, alongside continued expectations for Federal Reserve rate cuts over the next year and robust corporate profit growth. Together they have kept money flowing into stocks.
Diversification cushions the chip declines
The S&P 500's diversified makeup means gains in companies outside of semiconductors — software firms, internet platforms, banks, and retailers — have cushioned the impact of declines in Nvidia, AMD, Broadcom, and other chipmakers.
Investors increasingly view the semiconductor summer rout as a repricing of AI infrastructure expectations rather than a signal that the broader US economy or corporate earnings outlook is poised to fall off a cliff. Gordon said he does not necessarily take a negative economic message from the chip sell-off, and does not necessarily think it can be directly attributed to what is going to happen in the economy.
Source: Yahoo Finance
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