The Nasdaq 100’s strong performance in July may not be a sure thing at this point. The benchmark, which is comprised of the top 100 non-financial companies by market capitalization in the Nasdaq Composite Index, has recorded a July gain in 17 of the past 18 years. During this period, the index rose an average of 4.1% per month. There’s just one problem. Investors may already be looking ahead to gains this time. Despite posting a flat performance in June, NDX is still up 20% for the year, its best first half since 2023. Semiconductor stocks, which have driven much of the Nasdaq 100’s gains this year, could soon lose momentum. Wolf Research strategist Rob Ginsberg highlighted that the PHLX Semiconductor Index (SOX) has risen 95% from its second quarter low to high. The second quarter also ended with an 88% increase. “I’ve seen outrageous candlesticks every quarter throughout my career, but I don’t know if anything will top what we just experienced with SOX,” he said. BTIG’s Jonathan Krinsky points out another troubling trend: “July is very strong for SOX, as is NDX, but it actually tends to peak in mid-July. August has been the worst month for SOX since 2008, with an average decline of -0.96% and an increase of only about 50%.” “Why is this happening? One explanation is that July is the start of the second half of the year, with new capital being allocated and also the run-up to EPS season. There is often strong movement ahead of earnings, and once the real news wears off, there is some downward vacuum in prices,” Krinsky added. Bottom line: Seasonality has historically favored the Nasdaq 100, but it may not be enough to prevent investors from balancing their positions after such a strong first-half performance.
