"Major Rotation": Investors Are Selling Off Chipmakers' Stocks After a Strong Rally

The Nasdaq Composite technology index fell on Wednesday, July 1, due to a sell-off in chipmaker stocks. Analysts attribute this to profit-taking following the rally in the first half of the year. The Dow Jones Industrial Average, a blue-chip index, rose to a new all-time high during the day but then lost momentum and closed slightly lower.

— The S&P 500 broad-market index fell 0.21% on June 1.

— The Dow Jones Industrial Average, a "blue-chip" index, fell 0.02% on Wednesday. During the day, it was on track for a third consecutive record high, but lost its gains before the market closed.

— The Nasdaq Composite technology sector index fell by 0.66%.

— The Russell 2000 Small- and Mid-Cap Index fell 0.1% over the course of the day.

— Brent crude oil futures fell 2.4% to $71.2 per barrel, while WTI futures fell 2% to $68.12 per barrel.

The Nasdaq Composite fell on July 1 as investors sold off semiconductor stocks to lock in profits after a broad range of such stocks rose by more than 80% in the first half of 2026, according to CNBC. Shares of memory manufacturer Micron, which had been the driving force behind the S&P 500 and the Nasdaq Composite from January through June, plummeted more than 10% on Wednesday. Shares of flash memory manufacturer SanDisk also lost more than 10%. Nvidia and Broadcom shares fell by about 1% and 2%, respectively, during the session. Chipmakers Intel and AMD lost 7.8% and 4.8%, respectively. Marvell Technology shares fell 7.4%.

The Roundhill Memory ETF, which invests in memory manufacturers, fell 10.8% on Wednesday, while the broader Shares Semiconductor ETF, which provides exposure to the semiconductor industry, declined 6.4%.

Stocks of the “Magnificent Seven” companies helped stem the Nasdaq’s decline. Meta Platforms’ stock rose nearly 9% after the company announced plans to launch a cloud business: it will sell excess computing capacity, which the company expects will boost its revenue. Other tech giants, Microsoft and Apple, also jumped 3% and nearly 2%, respectively.

A rotation of capital in the market began after the major indices closed out the first half of 2026 with significant gains: the Dow jumped 8.9%, marking its best first half since 2021, the S&P 500 rose 9.6%, and the Nasdaq gained 12.8%. The Russell 2000 small-cap index soared nearly 22%, marking its best first half of the year since 1991.

On Wednesday, investors were awaiting comments from the Fed regarding a possible rate hike: the regulator’s new chairman, Kevin Warsh, spoke at the ECB’s annual Central Bank Forum in Portugal. However, Warsh did not provide any direct answers regarding a possible imminent rate hike in the U.S., reiterating that he does not intend to offer “forward guidance” on future interest rate policy, according to Bloomberg.

The Institute for Supply Management's manufacturing business activity index remained near a four-year high in June, the agency reports. Ahead of the release of U.S. employment data, statistics showed that private-sector job creation remained steady in June, Bloomberg notes. The government’s employment report, due out on Thursday, is expected to show that U.S. employers added 115,000 jobs in June. This would mark the strongest six-month hiring streak since mid-2024.

“A figure just above 100,000 [new jobs] and a stable unemployment rate is the best-case scenario for this market, as it confirms sustained economic growth without increasing the likelihood of a rate hike,” — Tom Essaye, founder and president of Sevens Report Research, told Bloomberg.

— “Trading driven by the ‘Great Rotation’ continues in the third quarter: the ‘boring blue chips’ of the Dow Jones Industrial Average continue to attract inflows directly from funds freed up after recent profit-taking in tech stocks,” — Jeff Kilburg, founder and CEO of KKM Financial, told CNBC. — “This is an extremely healthy trend that underscores the broadening participation of stocks in the ongoing bull market, now in its fourth year.”

— Although the weakness in chipmaker stocks may persist for some time, Jay Woods, chief market strategist at Freedom Capital, is confident that it won’t last long. “We believe that rotation will remain the main theme of the second half of the year: the technology sector, which has risen sharply, will consolidate in the coming quarter before returning to its previous highs by the end of the year,” MarketWatch quotes Woods as saying.

This article was AI-translated and verified by a human editor