Skip to navigationSkip to main contentSkip to right columnADVERTISEMENTJoy WiltermuthThu, July 16, 2026 at 11:02 PM GMT+2 4 min readInvestors are selling highflying chip stocks and buying other parts of the market that might benefit from a resilient economy - Getty ImagesInvestors seem to be second-guessing the stunning rally in chip stocks as another earnings season picks up steam.Semiconductor stocks, following their stratospheric rise this spring, were on the verge of a bear market on Thursday.Most Read from MarketWatchThe Lehman Bros. moment of the AI bubble is coming, says this critic warning of fallout for tech stocks and the entire market10 U.S. metro areas where builders are slashing prices on new homesSemiconductor stocks are on the verge of a bear market. Is the thrill in the chips trade gone?The benchmark PHLX Semiconductor Sector Index SOX of the 30 biggest U.S.-listed chip stocks was down 19% on Thursday from its June 22 record high, according to Dow Jones Market Data.Its 4.3% retreat on Thursday to 11,8767.50 left it on the doorstep of the 11,707.78 closing level that would confirm a bear market, defined as a pullback of at least 20% from a previous peak.Chip stocks gained in the spring as investors cooled on the "Magnificent Seven" tech companies MAGS footing the bill for the AI data-center buildout. Money instead flocked to chipmakers and other industries set to benefit from the firehose of spending.Yet recent signs point to another shift taking place under the hood of the stock market. The S&P 500's financials sector XX:SP500.40 logged a back-to-back record close on Thursday following strong bank earnings. The Dow Jones Transportation Average DJT was up more than 30% on the year, near record territory, while the State Street SPDR S&P Retail ETF XRT ended near its highest since early 2022, according to FactSet."I think the broadening is very healthy," said David Royal, chief financial and investment officer at Thrivent. It also points to promising signs in recent labor-market data and retail sales. "You don't make an auto purchase unless you have some degree of confidence" in the jobs market, he added.See: