Market rotation is moving capital away from semiconductor stocks and into defensive sectors, a shift Yahoo Finance Markets and Data Editor Jared Blikre describes as a hallmark of bull markets. While the Nasdaq remains in the red, investors are seeking safety in healthcare and energy, which are outperforming the broader market despite recent volatility in chip-related names.
Healthcare has reached a record high, marking its first milestone since mid-August. Blikre noted that this move has not been widely tracked by investors, though large companies like Eli Lilly and Merck have performed well alongside Moderna. Energy stocks are also tied with consumer staples for their performance in August, with the sector outperforming the rest of the broader market.
In the technology sector, CoreWeave (CRWV) experienced significant intraday movement following news reported yesterday. The stock fell more than 10% at its lows before rallying off those lows. Despite this rebound, CoreWeave remains down 4% year-to-date. Blikre observed that stocks which have underperformed this year are currently seeing the most gains, a pattern he identified as market rotation. This includes Oracle, which is down 30% year-to-date but started the day in the red before rising 3%.
Conversely, high-performing stocks are facing selling pressure. Dell is down 9% in recent trading but remains up 267% year-to-date. Blikre characterized this dynamic as investors withdrawing from winners and providing support to laggards. He stated that this behavior is typical in a bull market environment.
The semiconductor sector faces continued headwinds, with Blikre stating that chip stocks are not out of the woods. A heat map of semiconductors shows deep red performance for the month of October, with 11 days recorded so far. The sector index is down 9.1% in October and has tread water year-to-date. Blikre pointed to a recent upside breakout that immediately reversed as a "bull trap," comparing it to similar head fakes seen in Bitcoin and the XLK large-cap technology ETF. He suggested the sector may test lower levels, potentially reaching 10,000, citing minor support at current levels.
Specific memory chip stocks are under particular pressure. The DRAM index is down 19.4% in October alone. This decline contributes to the broader narrative of investors moving away from high-beta tech names toward more stable sectors. The shift highlights a defensive posture among market participants as they navigate uncertainty in the technology space.