The Second Half Setup for Stocks 7/1/26

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**Scott Wapner** (1:00)
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Thanks, guys. Welcome to the Halftime Report. I'm Scott Wapner, front and center of this hour, second half strategy, stocks looking to extend their record run. Joining me for the hour to discuss and debate Joe Terranova, Steve Weiss, Brian Belsky, Bryn Talkington. Check the markets here. We have the Dow, the S&P, the Russell are in the green. Nasdaq's a little bit red. Dow just clocked its best first half since 21 Made a new closing high yesterday, as you know. Russell's best first half since 1991
Let's give you the scorecard here, show you what we've done. Year to date, Dow's up 9%, S&P's up 10, Nasdaq up 13, Russell up 22 So that's the scorecard, if you will. And history is on the bull side. In July, the S&P 500 hasn't had a negative July since 2014
How about that, Mr. Terranova?

**Joe Terranova** (2:04)
Well, I think that is going to be the theme for the remainder of 2026, the continuation of what is a bullish trend. What is interesting about today is if you had the advanced knowledge that semiconductors would be down 4%, the advanced knowledge that AI infrastructure would be down near double digits, whether it's your Corning, your Micron, your AMD, you would think, and you see the momentum factor down nearly 4%, you would think the market would roll over. But the opportunity lies in where the underperformance ultimately has been in 26
And yes, that's taking you to three sectors like consumer discretionary, financials, which have been the laggard so far year to date, but it's also finding the opportunity in the Mag-7.

**Scott Wapner** (2:50)
Well, why would you think, just how you laid it out, why would you think if all of those things happened that you, the market would, in your words, roll over?
The market has been telling you for the better part of the last month, that that in fact is not the case, that what's turned out of tech has turned into other areas. Over the last month, the Dow is up 3%, the Russell is up nearly 5%. At the expense of a NASDAQ that's down almost 4%, and an S&P 500 as a result of those mega cap stocks not doing all that much is also in the red. Mark, it's proven that to be incorrect.

**Joe Terranova** (3:27)
The correct from a fundamental standpoint, I agree with you, from a mathematical standpoint, if you think about the semiconductors and the AI infrastructure, there are a significant weighting of the S&P overall. The advantage that you have is in fact, when you identify the under performance so far in 26, the Mag 7 fall into that category. So today you're benefiting from Microsoft, you're benefiting from Meta, you're benefiting from Apple, you're benefiting from Tesla. All the Mag 7 names are now participating and statistically, that's picking up the slack.

**Scott Wapner** (4:04)
Weiss, what's your outlook here? Tony Pascarello at Goldman says his expectation is quote, global equities will trend higher in the second half. This view is rooted in the house call that double digit S&P earnings growth will persist through 2027
Earnings estimates are for 24.3% earnings growth. That's the consensus. On April 1st, it was 19.2. On January 1st, it was 15.2. In other words, estimates continue to go up, which is why you get targets on the S&P that continue to go up towards eight or at eight, if not above 8,000 by the end of the year.

**Steve Weiss** (4:42)
Yeah, so general, I mean, it's a bifurcated economy. Forget about that first second. What's powering the economy should continue to power the economy, which is AI spend. And when you take a look, I was looking this morning at the individual stock price performance in the S&P 500