Bespoke’s Morning Lineup – 7/6/26 – Falling SOX

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“Philosophy is common sense with big words.” – James Madison

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US futures are coming back from the holiday weekend full of life, with the S&P 500 poised to gap up 0.5% at the open while the Nasdaq rallies more than 1%. Treasury yields are lower, with the 10-year yield moving down to 4.46%. Crude oil prices have seen little movement, with WTI trading right below $69 per barrel, and gold is rallying 1% to $4,167 per ounce. In crypto, Bitcoin is down over 1% and below $62K.

Asian markets kicked off the new week on a quiet note, with Hong Kong (+1.1%) the only benchmark to move up or down by more than 1%. The Nikkei declined 0.1% while South Korea declined 0.5%. China’s Shanghai Composite was also down 0.1%.

The tone for European stocks is similarly muted, but more skewed to the downside. The STOXX 600 is trading down 0.3% in early trading. Spanish stocks are leading the losses, down 0.8%, while French stocks are unchanged. Retail sales and PPI for the region both rose 0.2% in May and were both right in line with expectations.

The only data on the calendar today are Service sector PMIs from S&P and ISM, and the earnings calendar is blank with no real notable reports until Thursday when Pepsi reports before the open.

Semiconductor stocks really limped into the holiday weekend as the Philadelphia Semiconductor Index (SOX) fell 5.4% on Thursday following a 6%+ decline on Wednesday. That was the first back-to-back 5%+ declines in the index since April 2025. Those two declines alone were enough to put the SOX into correction territory, but with the index already off its highs heading into Wednesday’s session, it is now down 13.7% from its recent closing high. This current correction for the index comes less than a month after another 12.3% correction that ended in early June. Volatility in the SOX is clearly picking up.

The chart below shows all 127 SOX corrections since its inception in 1994 in terms of time and price. Overall, the median correction has lasted 22 days (current correction has been 10 days) and experienced a peak-to-trough decline of 15.64%. So, the current period is less than halfway there in terms of time, but not far from the median in terms of price.

While the SOX itself is down nearly 14%, the individual stocks that make up the index have seen larger declines relative to their respective peaks. Only four of the index’s 30 components are currently in drawdowns of less than 15%, and the median decline has been 21.6%. The biggest losses have been in the shares of Rambus (RMBS), ON Semiconductor (ON), Qualcomm (QCOM), Skyworks (SWKS), and Arm Holdings (ARM), all of which are down over 30%. Nvidia (NVDA), the largest of the stocks in the index, has been a big underperformer on the way up, but on the way down, it hasn’t been quite as extreme as its current drawdown of 17.6% is four percentage points less than the median of the index’s 30 components.

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