Small Caps and Semiconductors Rally Amidst Mega-Cap Weakness

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Macro Overview

Global markets saw a significant divergence as U.S. large-cap equities finished a volatile session nearly unchanged while international stocks posted solid gains. The S&P 500 (IVV) slipped a mere 0.02%, weighed down by weakness in some mega-cap names. In contrast, Developed ex-U.S. (EFA) and Emerging Markets (EEM) advanced 0.87% and 1.06%, respectively. Fixed income markets were stable following in-line inflation data, while Broad Commodities (DJP) were a notable outlier, climbing 1.90%.

U.S. Size & Style

A clear risk-on rotation into smaller companies defined the U.S. style-box performance, as small-caps significantly outpaced their larger counterparts. The Small Cap (IJR) index rose 1.28%, with Small Growth (IJT) leading all segments with a 1.41% gain, pushing its RSI into overbought territory at 71. Mid-caps also performed well, with the Mid Cap (IJH) index up 0.92%. Meanwhile, Large Cap (IVV) remained flat, reflecting the offsetting pressures within the market’s largest stocks.

Name (Ticker) 1-Day 1 Month 3 Month YTD 1 Year
Large Value (IVE) -0.09% -0.46% 7.44% 7.42% 19.40%
Large Cap (IVV) -0.02% -1.43% 11.93% 8.10% 22.18%
Large Growth (IVW) 0.07% -2.22% 15.96% 8.47% 24.26%
Mid Value (IJJ) 0.90% 4.68% 11.35% 12.50% 22.59%
Mid Cap (IJH) 0.92% 4.29% 12.36% 16.41% 26.90%
Mid Growth (IJK) 0.96% 3.87% 13.22% 20.02% 30.65%
Small Value (IJS) 1.17% 5.19% 14.36% 19.94% 40.31%
Small Cap (IJR) 1.28% 6.78% 17.29% 22.27% 37.77%
Small Growth (IJT) 1.41% 8.35% 20.24% 24.48% 35.26%

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U.S. Sectors & Industries

Sector performance was widely dispersed, reflecting the day’s crosscurrents. Industrials (XLI) led the advance with a strong 2.17% gain, followed by Health Care (XLV) and Materials (XLB), which rose 1.49% and 1.33% respectively. Technology (XLK) managed a 0.83% increase, buoyed by a semiconductor rally, even as some mega-cap tech constituents fell. On the downside, Consumer Discretionary (XLY) was the weakest performer, dropping 1.49%, while Communication Services (XLC) fell 0.90% and entered oversold territory with an RSI of 25.

Name (Ticker) 1-Day 1 Month 3 Month YTD 1 Year
S&P 500 (SPY) 0.14% -1.27% 12.08% 8.25% 22.28%
Industrials (XLI) 2.17% 7.45% 11.79% 19.32% 29.69%
Health Care (XLV) 1.49% 4.28% 6.89% 1.39% 18.25%
Materials (XLB) 1.33% 3.47% 5.31% 15.24% 21.58%
Energy (XLE) 0.97% -8.43% -10.06% 22.63% 31.92%
Technology (XLK) 0.83% 2.44% 35.12% 28.51% 48.81%
Utilities (XLU) 0.68% 1.75% 1.97% 8.83% 17.07%
Real Estate (XLRE) 0.18% 0.93% 11.69% 12.21% 11.85%
Financials (XLF) -0.50% 3.27% 8.71% -1.57% 5.57%
Consumer Staples (XLP) -0.59% -0.32% 3.70% 9.42% 7.53%
Communication Services (XLC) -0.90% -8.31% -5.01% -9.79% 1.62%
Consumer Discretionary (XLY) -1.49% -4.70% 2.57% -4.70% 7.23%

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Global Thematic

Artificial intelligence and semiconductor-related themes dominated the day’s leaders, fueled by a strong earnings report from a key chipmaker. The Roundhill Memory ETF (DRAM) surged an exceptional 9.95%, while other AI-focused funds like VistaShares Artificial Intelligence Supercycle ETF (AIS) also posted gains over 4%. Cannabis-related ETFs also saw a strong bid, with the Amplify Seymour Cannabis ETF (CNBS) rising 4.39%. In contrast, crypto and space-themed ETFs lagged, with the First Trust SkyBridge Crypto Industry & Digital Economy ETF (CRPT) declining 4.12%.

Name (Ticker) 1-Day
Leaders
Roundhill Memory ETF (DRAM) 9.95%
VistaShares Artificial Intelligence Supercycle ETF (AIS) 4.63%
Amplify Seymour Cannabis ETF (CNBS) 4.39%
AdvisorShares Pure US Cannabis ETF (MSOS) 4.29%
WisdomTree Artificial Intelligence and Innovation Fund (WTAI) 4.08%
Laggards
First Trust SkyBridge Crypto Industry & Digital Economy ETF (CRPT) -4.12%
Defiance Drone and Modern Warfare ETF (JEDI) -3.39%
Tema Space Innovators ETF (NASA) -3.37%
Schwab Crypto Thematic ETF (STCE) -3.36%
Roundhill Space & Technology ETF (MARS) -3.31%

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Developed ex-U.S. & Emerging Markets

International equities broadly outperformed their U.S. counterparts, with several markets posting significant gains. South Korea (EWY) was the standout performer, jumping 3.92% as enthusiasm from the U.S. semiconductor sector spread to Asian tech shares. Japan (EWJ) also benefited, rising 0.84%. Among emerging markets, Mexico (EWW) advanced 2.36%, while China (MCHI) was a notable laggard, falling 1.26%.

Name (Ticker) 1-Day 1 Month 3 Month YTD 1 Year
Developed Markets ex-U.S.
Developed ex-U.S. (EFA) 0.87% 0.76% 8.39% 9.10% 21.84%
Australia (EWA) 0.07% -1.58% 1.89% 8.15% 10.69%
Canada (EWC) 0.58% -1.06% 5.97% 7.34% 28.88%
France (EWQ) 0.67% 2.31% 7.55% 2.72% 10.88%
Germany (EWG) 1.28% -2.39% 6.12% -1.44% 1.79%
Hong Kong (EWH) -0.14% -8.65% -6.78% 0.98% 10.44%
Japan (EWJ) 0.84% 2.49% 10.78% 16.28% 34.51%
Netherlands (EWN) 1.21% 3.38% 18.10% 21.17% 33.36%
South Korea (EWY) 3.92% 12.62% 60.48% 110.86% 189.71%
Switzerland (EWL) 0.98% 2.03% 9.81% 6.59% 18.90%
U.K. (EWU) 0.95% -1.16% 3.10% 5.82% 20.79%
Emerging Markets
Emerging Markets (EEM) 1.06% 3.68% 18.95% 24.84% 44.47%
Brazil (EWZ) 0.97% -5.12% -8.08% 8.61% 29.65%
China (MCHI) -1.26% -7.97% -9.77% -14.91% -6.82%
India (INDA) -0.40% 2.15% 4.24% -8.55% -10.13%
Indonesia (EIDO) 1.62% -7.23% -24.05% -35.06% -28.63%
Malaysia (EWM) -1.22% -7.02% -6.21% -0.63% 15.96%
Mexico (EWW) 2.36% -1.45% 1.96% 10.54% 30.91%
South Africa (EZA) 1.59% -4.16% -2.51% -6.24% 28.67%
Taiwan (EWT) 0.18% 8.33% 44.92% 65.13% 91.49%
Thailand (THD) 0.38% -2.06% 5.63% 19.15% 41.21%

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Fixed Income

The fixed income market saw modest gains across most segments as Treasury yields eased following the release of key inflation data that met expectations. The U.S. Aggregate Bond (AGG) benchmark edged up 0.06%, while Inflation Protected Treasuries (TIP) rose 0.16%. Credit-sensitive assets were mixed, with High Yield (HYG) up 0.04% but Preferred Stock (PFF) declining 0.78%. Convertible bonds (CWB) also performed well, gaining 0.36% amid pockets of equity strength.

Name (Ticker) 1-Day 1 Month 3 Month YTD 1 Year
Multisector
Short-Term (BSV) 0.06% 0.42% 0.59% 0.52% 3.23%
Core (AGG) 0.06% 1.16% 1.16% 1.02% 4.48%
Core Enhanced (IUSB) 0.06% 1.16% 1.26% 1.13% 4.80%
Long-Term (BLV) 0.01% 2.78% 2.35% 1.97% 5.76%
Government
Inflation Protected (TIP) 0.16% 0.36% 1.06% 1.29% 3.72%
Intermediate (SPTI) 0.14% 0.90% 0.38% 0.15% 3.00%
Short-Term (SPTS) 0.03% 0.32% 0.57% 0.62% 3.06%
Ultrashort (BIL) 0.01% 0.31% 0.90% 1.70% 3.85%
Long-Term (SPTL) -0.04% 3.28% 1.68% 1.70% 4.64%
Specialty
Convertible (CWB) 0.36% 1.91% 15.44% 21.29% 34.06%
Mortgage Backed (MBB) 0.18% 1.25% 1.27% 1.44% 5.88%
Corporate (SPIB) 0.09% 0.80% 1.18% 0.89% 4.67%
High Yield (HYG) 0.04% 0.47% 2.11% 1.57% 5.68%
Bank Loans (BKLN) -0.05% -0.29% 0.57% -0.28% 3.81%
Preferred Stock (PFF) -0.78% -2.13% 0.80% 0.32% 5.49%
International & EM
Emerging Local (EMLC) 0.32% 0.98% 2.83% 1.12% 7.92%
International Local (IGOV) 0.07% -1.04% -0.54% -1.59% -2.67%
Emerging USD (EMB) -0.01% 1.89% 3.63% 2.50% 10.56%
International USD (BNDX) -0.02% 1.13% 1.56% 1.50% 2.53%
Municipals
Intermediate (MUB) 0.11% 1.59% 2.30% 1.78% 6.60%
Long-Term (MLN) 0.06% 2.58% 3.13% 2.70% 9.05%
Short-Term (SUB) -0.01% 0.36% 0.56% 0.77% 2.71%
High Yield (HYD) -0.12% 1.70% 3.86% 2.48% 7.58%

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Commodities

Commodities posted a broad-based rally, with notable strength in the energy complex. WTI Crude (USO) gained 2.84%, and Brent Crude (BNO) rose 2.80%, lifting the broad energy index (DBE) by 2.54%. Precious metals also advanced, with Silver (SLV) up 1.12% and Gold (GLD) adding 0.97%. Agricultural commodities joined the positive trend, as Corn (CORN) increased by 1.99%.

Name (Ticker) 1-Day 1 Month 3 Month YTD 1 Year
Broad Commodities (DJP) 1.90% -11.15% -4.83% 16.94% 29.01%
Agriculture
Corn (CORN) 1.99% -7.68% -9.60% -4.40% -3.69%
Soybeans (SOYB) 1.97% -2.00% 0.86% 12.35% 13.84%
Broad (DBA) 1.36% -2.32% -0.15% 5.49% 6.92%
Wheat (WEAT) 0.89% -8.11% -1.78% 12.97% 0.04%
Sugar (CANE) 0.43% -5.66% -10.71% -4.25% -15.51%
Energy
WTI Crude (USO) 2.84% -22.43% -3.60% 58.05% 49.11%
Brent Crude (BNO) 2.80% -23.85% -14.13% 47.88% 43.47%
Broad (DBE) 2.54% -16.95% -6.13% 52.65% 48.20%
Natural Gas (UNG) 0.17% 7.40% -0.93% -4.16% -25.87%
Industrial Metals
Copper (CPER) 1.85% -4.98% 9.44% 5.78% 19.83%
Broad (DBB) 1.56% -6.72% 5.00% 5.32% 29.96%
Precious Metals
Palladium (PALL) 1.89% -12.23% -16.74% -25.99% 10.20%
Platinum (PPLT) 1.83% -17.06% -17.41% -22.28% 16.81%
Silver (SLV) 1.12% -23.41% -19.71% -18.72% 58.62%
Broad (DBP) 1.06% -13.63% -13.08% -10.09% 25.08%
Gold (GLD) 0.97% -10.72% -11.25% -6.77% 20.30%

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Cryptocurrency

The digital asset market moved lower, bucking the risk-on sentiment seen in other asset classes like small-cap stocks and commodities. Bitcoin (IBIT) declined 1.03%, while Ethereum (ETHA) fell 1.51%. The broader Multi-Coin (NCIQ) index lost 1.15% on the day. This weakness extended to crypto-related equities, which were among the session’s worst-performing thematic strategies.

Name (Ticker) 1-Day 1 Month 3 Month YTD 1 Year
XRP (XRP) -2.12% -22.79% -26.76% -43.71%
Ethereum (ETHA) -1.51% -24.60% -28.46% -47.66% -36.20%
Multi-Coin (NCIQ) -1.15% -22.22% -18.48% -35.77% -46.49%
Bitcoin (IBIT) -1.03% -21.97% -16.55% -32.49% -45.30%
Solana (SOLZ) -0.10% -22.19% -28.64% -47.60% -58.30%

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What to Watch Today

Looking ahead to Friday, the economic calendar is relatively light for the final trading day of the week. Investors will be watching for the final June readings of the University of Michigan Consumer Sentiment and Inflation Expectations, both due at 10:00 AM ET. Additionally, speeches from Federal Reserve members Williams and Kashkari could provide further commentary on the path of monetary policy. The earnings calendar is sparse, with Apogee Enterprises (APOG) scheduled to report before the market opens.

This material is for informational purposes only and should not be considered investment advice. All investments, including ETFs, involve risk, including the possible loss of principal. Investors should consider their investment objectives, risks, charges, and expenses carefully before investing.

This analysis was developed by the team at ETF Action. We leverage advanced AI tools to assist in the drafting and refinement of our content, based on our expert prompts, direction, and final review.