Can the Rally Outrun Semi Weakness? 7/28/26

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**SPEAKER_2** (0:30)
The board recommends approving.

**Joe Terranova** (0:31)
Regarding that seat on the committee, we're promoting.

**SPEAKER_4** (0:33)
To boost quarterly earnings.

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**Scott Wapner** (1:00)
I'm Scott Wapner and you're listening to CNBC's Halftime Report, the podcast, the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in.

**Michael Santoli** (1:15)
Welcome to the Halftime Report. I'm Mike Santoli in for Scott Wapner. Front and center this hour, the semi-sell-off, is it showing signs of easing and can the market rotation continue to offset any further weakness in the AI trade? The Investment Committee is standing by with what it all means for your money. Joining me for the hour, Joe Terranova, Stephanie Link, Josh Brown will join us shortly as well. Thanks for being here for the hour. Let's check the markets. The picture has firmed up quite a bit in the last hour or so. The S&P 500 up about four-tenths of one percent. It was actually negative by a similar amount at the lows. The NASDAQ composite a little bit higher. Semi's, you see them down 3.8 percent. They're up two or three percent off the morning lows. Still, obviously, the theme of the day, guys, has been starting with a South Korea sell-off, a further crash in that market. It seemed to spill into a flush in some of the affected names, related stocks in the US open.
I did note the S&P, Philadelphia S&P Semiconductor, ETF hit the 100-day moving average for the first time since early May. It bounced off that level. It has given back half of the gain it had in this huge surge it had from late March into the highs in June. So I guess the multiple questions, one, have we seen a flush?
Is it perhaps going to abate a little bit? Is it telling us anything about the fundamentals or is it just a repositioning momentum unwind? And then can the rest of the market continue to hold the fort as it has been, Joe?

**Joe Terranova** (2:50)
So I think it's completely de-leveraging. And I think it's extreme positioning in the direction of memory and AI towards the end of June, and we're working off. Why do I feel comfortable that this is not some inflection point for the market where fundamentals are shifting? Think about the S&P 500 today. I think a lot of people are going to be surprised with what I'm about to say. 12% of the S&P 500 index today is recording a new 52-week high. It's not your technology names, yes. Apple is participating, but it's your JP Morgan. It's your Visa. It's your Target. It's your Best Buy.
We're seeing that momentum is shifting and going to in other different directions.
If you want to go back and look at the memory trade, the AI name, and the halo effect of the semiconductors itself, and have some confidence that maybe it's bottoming out. A couple of weeks ago, I took a personal position. Yeah. Purely based on momentum in Nvidia, Mike. It was up about five and a half percent. Didn't want to lose five percent on the trade. Had to stop down below to lose five percent. Guess what? Got stopped out this morning. Here comes the reversal. By a few pennies, right? It's now higher. By a few pennies. I'm saving America and everyone that's long in video.

**Michael Santoli** (3:59)
So we threw your position into the volcano as a sacrifice. I guess that worked.
Steph, here's the thing with saying that it is a pure positioning unwind and the rest of the market has actually benefited from this rotation. On the way up, it was largely a position stampede. It was a crowding into what was winning. And we don't know where the equilibrium is, right? You have Wells Fargo this morning saying that, you know, are semis discounting much slower growth? And is that a correct thing that the market's doing? Essentially, compressing the valuations and saying, we're not really sure how many years we can count on this earnings story.