The second half setup for stocks
Speakers
Joe Terranova
— Senior Managing Director, Virtus Investment Partners
Steve Weiss
— Chief Investment Officer, Short Hills Capital Partners
Brian Belski
— Chief Investment Strategist, BMO Capital Markets
Bryn Talkington
— Managing Partner, Requisite Capital Management
Scott Wapner
— Host, CNBC
Summary
The Investment Committee debates the second-half setup for stocks. Members see a continued bullish trend, supported by strong earnings growth and a broadening market beyond tech. Key themes include rotation into laggard sectors like consumer discretionary and financials, small-cap outperformance, and a divergence within tech between software and memory/semis. Mag-7 stocks are seen as participating again, while technical and fundamental case is made for software, small caps, and memory chips.
- S&P 500, Dow, and Russell all showing strong first-half performance with Russell best since 1991.
- Joe Terranova sees broadening into consumer discretionary, financials and renewed participation from Mag-7 stocks.
- Steve Weiss argues market strength is rooted in AI spend and rising 24% S&P earnings estimates.
- Brian Belski advocates for small caps, citing superior earnings growth of 28% and attractive fundamentals.
- Brian Talkington highlights a technical base in software (IGV) and strength in memory (MU/DRAM) supported by a catalyst from SK Hynix ADR debut.
- Debate revolves around whether market broadening is real or still largely AI-driven.
- Historical July seasonality noted as supportive for equities.
Ideas
Bullish trend continues for rest of 2026
The second half of 2026 will continue the bullish trend for the overall stock market, as the market has shown resilience despite weakness in semiconductors and AI infrastructure, with broadening into previously underperforming sectors supporting further gains.
Laggard sectors offer catch-up opportunity
Consumer discretionary and financials have been the biggest laggards year-to-date, and their underperformance creates an opportunity for catch-up as the market broadens out from tech.
Mag-7 stocks now participating and contributing
The Magnificent Seven stocks are now participating and picking up the slack in the market, benefiting from rotation when semiconductors and AI infrastructure dip, and they are poised for further strength.
Software base built, rebuilding begins
Software stocks (IGV) have built a technical base with higher lows, suggesting a rebuild is beginning, which will benefit cyber names, Palantir, and Microsoft.
Memory trade holds support, catalyst ahead
Memory and semiconductor stocks like Micron and the DRAM ETF are holding support at the 200-day moving average, with the trade intact; upcoming SK Hynix ADR debut will be a huge catalyst for retail and hedge funds.
