Defensive Sectors Offset Chip Selloff as Dow Climbs to Another Record High

Stocks finished Thursday’s session on a mixed note as another sharp decline in semiconductor shares and selective weakness among mega-cap technology stocks masked impressive strength across several defensive sectors. The S&P 500 finished essentially unchanged, the Nasdaq Composite lost 0.8%, while the Dow Jones Industrial Average gained 1.1% to notch another record closing high.

Despite the mixed performance, the broader market remains on solid footing, with all three major averages still up between 1.8% and 2.1% for the week.

Semiconductor stocks remained under pressure for a second consecutive session as the recent AI-driven momentum trade continued to unwind. The Philadelphia Semiconductor Index fell 5.4%, with memory-related names leading the decline after Bloomberg reported that Apple is seeking approval to purchase memory chips from China’s ChangXin Memory Technologies. The prospect of increased competition weighed heavily on the group, with Sandisk tumbling more than 14%, helping push the information technology sector down 1.5% and making it the weakest-performing sector of the day.

Selling pressure across the broader mega-cap technology space was more selective. Meta Platforms gave back a portion of Wednesday’s strong rally, while Tesla dropped 7.6%, extending its intraday reversal despite reporting better-than-expected second-quarter vehicle deliveries earlier in the day. Those declines pressured both the communication services and consumer discretionary sectors, which joined technology as the only S&P 500 sectors to finish in negative territory. The Vanguard Mega Cap Growth ETF declined 1.0%.

One notable bright spot came from Genuine Parts, which surged nearly 13% to become the top-performing S&P 500 stock after Bloomberg reported that O’Reilly Automotive is exploring a potential acquisition of the company’s automotive parts business.

Away from technology, investors rotated decisively into more defensive areas of the market. Health care led the advance with a 2.7% gain, followed closely by consumer staples (+2.4%), utilities (+2.3%), and materials (+2.1%).

Health care continued to build on its recent momentum, with hospital operators among the sector’s strongest performers after the Centers for Medicare & Medicaid Services proposed new initiatives designed to strengthen Medicare program integrity, combat fraud, and expand access to home health care. Universal Health Services and HCA Healthcare both posted solid gains on the news.

One notable difference from recent sessions was the performance of smaller companies. While the S&P 500 Equal Weight Index gained a healthy 0.8%, small- and mid-cap stocks failed to participate in the rotation out of technology. The Russell 2000 declined 0.6%, while the S&P MidCap 400 fell 0.4%, with both indexes retreating after reaching record highs earlier this week.

Overall, Thursday’s trading once again highlighted the market’s highly selective nature. Rather than broadly reducing equity exposure, investors continued rotating between sectors, trimming positions in semiconductors and select mega-cap technology names while adding exposure to health care, consumer staples, utilities, and other defensive groups. That rotation helped the Dow Jones Industrial Average secure another record high and kept the market’s strong weekly performance largely intact despite ongoing volatility within the technology sector.

Our FTinvest 11 model portfolio gained 0.48% to close at 991.42, marking its third consecutive daily advance and continuing the gradual recovery from the late-June pullback. Although the portfolio remains just below the 1,000 level, it has recovered further from correction territory and now trades approximately 8.1% below its all-time high of 1,078.93.

FTinvest 11 is now up approximately +6.81% year-to-date, maintaining a healthy gain for 2026 despite the elevated volatility experienced in recent weeks. The steady rebound suggests improving market sentiment following June’s sharp swings, while the portfolio’s disciplined, value-driven investment approach continues to emphasize long-term fundamentals over short-term price movements.

As a reminder, stock markets will be closed tomorrow, returning for a full session on Monday.