S&P 500 Equal Weighted Index

In a sharp divergence overnight, the S&P 500 rose +0.2% to another record high, while the PHLX Semiconductor Index (SOX) slumped 4.5%, highlighting the ongoing rotation underway beneath the market’s surface. As touched on earlier, the semiconductor rout was driven by mounting concerns over China’s rapidly advancing chipmaking capabilities, highlighted by the high-profile listing of memory-chip maker CXMT and reports Apple is considering its products, adding to existing worries around the durability of AI infrastructure spending and increasingly circular funding within the AI ecosystem.

Despite the sharp weakness across chipmakers, the broader market proved resilient. Strong earnings from non-semiconductor companies, including Coca-Cola’s better-than-expected result and upbeat guidance, alongside gains in Microsoft and Meta ahead of their earnings, helped offset the drag from semiconductors and lifted the S&P 500 to fresh highs.  With ~55% of S&P 500 companies having reported 2Q26 results, the season continues to track as one of the strongest in recent years: 185 companies have beaten EPS estimates, with an average EPS surprise of +17.4%, the best performance in five years according to Bloomberg Intelligence.

The session reinforced a key theme emerging in recent weeks: market leadership is broadening beyond AI hardware, even as semiconductor stocks undergo a significant valuation reset – a great read-through for the ASX which is devoid of semiconductors.

• We can see broad-based US stocks continuing to push higher into Christmas.