The Post-Tech Earnings Rotation: Your Next Move 8/3/26

**SPEAKER_1** (0:00)
The board recommends approving...

**Joe Terranova** (0:01)
Regarding that seat on the committee, we're promoting...

**SPEAKER_3** (0:02)
to most quarterly earnings...

**SPEAKER_4** (0:04)
Every day, shareholders meet to discuss important matters about the companies you invest in. Now you can easily make your voice heard. Vanguard Investor Choice gives you a say in the companies you invest in. With just a few taps, you can set your proxy voting preference for your index funds. Visit vanguard.com/investorchoice to learn more. Vanguard Investors own shares of our index funds, which own shares of the companies they invest in. Available for Vanguard index funds that participate in Investor Choice, Vanguard Marketing Corporation Distributor. Courage.

**Joe Terranova** (0:31)
I learned it from my adoptive mom.

**SPEAKER_1** (0:33)
Hold my hand.

**Joe Terranova** (0:33)
You hold my hand.

**SPEAKER_1** (0:36)
Learn about adopting a team from foster care at adoptuskids.org.

**SPEAKER_5** (0:40)
You can't imagine the reward.

**SPEAKER_3** (0:41)
Brought to you by AdoptUSKids, the US. Department of Health and Human Services and the Ad Council.

**Scott Wapner** (0:45)
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.
All right, Sarah, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, rallying stocks as August trading gets underway. We are, of course, trading the markets. We'll hit some of Joe Terranova's ETF rebalancing moves as well. Joining me for the hour, along with Joe, is Jim Labenthal, Sarad Satie, Steve Weiss. Take you to the markets. I said we are up to start trading in August and there is your picture. NASDAQ is leading the way today up near 2 percent, so it's a nice move higher as oil and yields are lower. We got through tech earnings. It's clear that Microsoft and Amazon come out the biggest winners. It would at least seem that way. Their cloud growth was amazing.
Meta and Apple were, I guess, the disappointments. If you want to take the stock movement as whatever judgment you want to make. And I mentioned at the top that you've had some rebalancing moves, and that's where we begin because it plays into the story. Interestingly so, and debatable as such. You sold Meta and Microsoft. Okay, so people out there are going to say, well, maybe I see Meta, and before the earnings report, I guess I could see Microsoft, but why now?
Take me through both.

**Joe Terranova** (2:07)
I mean, it's momentum. And I think I said to you before earnings last week, I said, Scott, Meta and Microsoft, these are not momentum names. Your reply was, you think? And you were right. They are not, you can't define them as momentum holdings. But what clearly we witnessed in the case of Microsoft was something that is fundamental strength. And a lot of times when you're looking at momentum, there is a disregard for good fundamentals.
And that's in fact what happened. So if you were to ask me today, if I had the ability to look at the ETF holdings and say, would I like to put Microsoft in it? The answer is obviously, of course, yes. The best cloud growth in the last four years, there's the ability to monetize the hyperscaler spending. But you're relying on a strategy, a factor that has worked relatively well so far in 2026
And that factor is making a pivot. It's making an internal pivot in the market. It's making a pivot away from some of the Mag-7, which we're underperforming. It's making a pivot away from some of the software names into other areas of the market.

**Scott Wapner** (3:14)
Now, okay, so I understand the rules of the ETF. Yep. They are what they are.

**Joe Terranova** (3:19)
They are what they are.

**Scott Wapner** (3:20)
And there's no way around it. However, when you see a name that has lost its momentum, but then you feel as though it's potentially on the cusp of restarting it, you're still beholden to whatever rules you have for this ETF to get rid of a Microsoft?

**Joe Terranova** (3:41)
It's a quarterly rebalance. So the answer to your question is yes. You wait until the next quarter. Now, one of the things that you can do is you could look at the positive catalyst from earnings and say to yourself, OK, let's pull back the rebalance calendar.
And I will tell you that's something that I am currently looking at. Maybe instead of rebalancing on the last business day of July, where you're teetering on having still Apple earnings and Microsoft earnings, maybe you push that into the third week of August, so you collect all of the S&P earnings data. That's something you could do. But to succinctly answer your question, unfortunately, that's what rules-based strategies are. And sometimes they're going to work in your favor, and sometimes the way it is today doesn't work.