Investors should shift away from popular momentum trades, says strategist
Shares of Intel, run by Lip-Bu Tan, are just one of the semiconductor plays that have retreated from recent highs.
The Nasdaq Composite COMP has just registered a five-day losing streak, it's longest such retreat since the start of the year, shedding 4.6% in the process.
The tech-heavy index's fall is more than double that of the broader S&P 500 SPX over the same period, and that speaks to two things; caution over the artificial intelligence trade and a broadening of the market as investors shift funds into sectors deemed more economy-sensitive.
Many investors in recent years have benefited handsomely from buying such a tech dip. But they may need to be much more selective this time, according to a team of strategists at Morgan Stanley led by Mike Wilson.
That's partly because he thinks the broadening trade has further to run, "driven by an underappreciated recovery in earnings across the market."
He favors discretionary goods, transports and regional banks, amid falling oil prices and the likelihood that the Federal Reserve will be less hawkish than the market currently thinks.
But another concern for Wilson is that recent volatility in semiconductors "is making historically high exposure levels in the space harder to maintain."
As an illustration of that volatility, the PHLX Semiconductor Index SOX lost 7.9% last week, having jumped 7.3% the week before that.
Wilson points to weakness in shares of hyperscalers of late and heightened earnings optimism as headwinds for the semis sector.
"In our view, this rotation away from the hyperscalers may be a leading indication that semis (key spending beneficiaries [of hyperscalers]) could now see a period of underperformance as earnings per share revisions breadth for the space comes up against historical extremes," says Wilson.
And he also sees semis as possibly "the latest commodity to boom this year," drawing what for bulls may be a worrying comparison to the performance of silver stocks - though with a four-month lag.
"If the broadening out is making a sustainable comeback, this price momentum in semis stocks likely needs to reach a climax, and it appears that may be happening, on schedule," Wilson says.
"This doesn't mean the cycle [for semis] is over...though a lack of price momentum in the space for now is likely to give other areas of the market room to outperform as relative tailwinds drive groups like discretionary and transports," he concludes.
The markets
U.S. stock-index futures (ES00) (YM00) (NQ00) are higher as Treasury yields BX:TMUBMUSD10Y rise. The dollar index DXY is a tad lower, as oil futures (CL.1) climb and gold futures (GC00) trade around $4,057 an ounce.
Key asset performance Last 5d 1m YTD 1y S&P 500 7354.02 -1.95% -2.98% 7.43% 19.13% Nasdaq Composite 25,297.62 -4.60% -6.21% 8.84% 24.78% 10-year Treasury 4.391 -12.50 -6.20 21.90 16.30 Gold 4053.5 -3.71% -10.22% -6.43% 22.28% Oil 70.42 -4.94% -23.85% 22.66% 8.39% Data: MarketWatch. Treasury yields change expressed in basis points
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The buzz
The U.S. and Iran reportedly agreed to halt attacks after repeatedly exchanging fire in the Persian Gulf over the weekend.
Apple $(AAPL)$ is lobbying the Trump administration for clearance to buy memory chips from a blacklisted Chinese company, according to the Financial Times.
Shares in Comcast $(CMCSA)$ are up 25% after the media group said it would spinoff NBCUniversal and Sky into separate companies.
Samsung Electronics (KR:005930) and SK Hynix (KR:000660) will invest more than $500 billion to expand memory-chip production.
A holiday-shortened week - Independence Day is on Friday - will see the nonfarm payrolls report brought forward to Thursday, while the earnings highlight is likely to be from Nike $(NKE)$ after Tuesday's market close.
How Warsh has begun to change the Fed.
The chart
Source: Miller Tabak
The swift pullback in the price of West Texas Intermediate crude (CL.1) has pushed it to oversold levels, according to Matt Maley, chief market strategist at Miller Tabak. The "over-hated commodity should be due for some sort of bounce soon," he says. Any rebound in oil prices may increase concerns about inflation which may hit Treasury prices and raise yields, Maley thinks. "So, like equity investors today, fixed income investors will want to stay very nimble in the days and weeks ahead."
Top tickers
Here were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern.
Ticker Security name SPCX Space Exploration Technologies NVDA Nvidia MU Micron Technology TSLA Tesla MSFT Microsoft GME GameStop TSM Taiwan Semiconductor Manufacturing AMD Advanced Micro Devices AAPL Apple PLTR Palantir Technologies
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June 29, 2026 07:03 ET (11:03 GMT)
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