Todd Sohn notes that semiconductor stocks have reached a historically rare 18% of the S&P 500 as market value rotates.
Todd Sohn, a Strategas ETF strategist, observed that semiconductor stocks have reached a historically rare territory, now accounting for approximately 18% of the S&P 500. This shift comes as $3.2 trillion in market value has rotated between the "Magnificent Seven" tech giants and semiconductor stocks outside of Nvidia. While the Magnificent Seven added $1.5 trillion in value in July, semiconductor stocks excluding Nvidia erased nearly $1.7 trillion, largely canceling each other out at the index level. The market is currently experiencing a rotation where software stocks are showing strength, with 44 of 51 stocks in the Yahoo Finance industry basket posting positive gains. In contrast, the median chip stock fell nearly 20% in July. Memory stocks, including Micron, have faced a bear market due to aggressive trading activity. Sohn noted that the current semiconductor rush shares similarities with the 2020 ARKK rush, characterized by elevated volumes before settling. Investors now look to upcoming Big Tech earnings to determine which side of the rotation will ultimately break the current market range.