Week ending 6-26-26
The market endured a difficult week on the surface, but the weakness was far more concentrated than the major averages alone would suggest. The S&P 500 fell 2.0% and the Nasdaq Composite declined 4.6% as another sharp pullback across semiconductor and mega-cap technology stocks weighed heavily on index performance. Beneath the surface, however, investors continued rotating into other areas of the market, with the DJIA (+0.6%), Russell 2000 (+1.0%), and S&P Mid Cap 400 (+0.7%) all finishing higher. Falling Treasury yields and another retreat in oil prices further supported defensive and rate-sensitive sectors throughout the week.
Technology remained the dominant story, though leadership became increasingly fragmented. Semiconductor stocks experienced another volatile stretch despite a powerful post-earnings rally from Micron that briefly reignited enthusiasm across memory names. The broader group struggled to build on those gains as investors continued trimming exposure to AI infrastructure stocks following weakness across South Korean chipmakers early in the week and renewed concerns surrounding the sector later in the week. Meanwhile, software stocks and several large-cap technology names periodically outperformed, highlighting an increasingly selective approach toward technology rather than broad-based selling. The information technology sector ultimately declined 5.4%.
The week's rotation extended well beyond technology. The health care sector (+7.9%) was the clear leader after several acquisition announcements and strong performances from large pharmaceutical and biotechnology companies, while the real estate (+4.0%) and utilities (+3.9%) sectors also posted sizable gains as Treasury yields steadily declined. Homebuilders and construction-related names also benefited from lower yields and easing energy prices. The continued strength across these groups reinforced the notion that investors were rotating within equities rather than exiting the market altogether.
Macroeconomic developments generally supported that rotation. Treasury yields trended lower throughout the week as economic data, including the PCE inflation report, largely met expectations while crude oil prices continued to retreat. WTI crude fell roughly 6% during the week as negotiations between the U.S. and Iran continued to progress and traffic through the Strait of Hormuz normalized, helping alleviate inflation concerns while supporting travel, construction, and other economically sensitive industries.
By week's end, the market remained defined by a clear divergence beneath the surface. While persistent weakness across semiconductor and mega-cap technology stocks drove the headline indices lower, improving breadth, leadership from defensive and rate-sensitive sectors, and continued resilience across much of the broader market suggested that investor appetite for equities remained intact despite heightened volatility within the market's most influential growth stocks.
Russell 2000: +1.0% week-to-date
S&P Mid Cap 400: +0.7% week-to-date
DJIA: +0.6% week-to-date
S&P 500: -2.0% week-to-date
Nasdaq Composite: -4.6% week-to-date