Semiconductors have become the single most important part of the market. Beyond the memory names, the broad semiconductor group now accounts for around 20% of the S&P 500's market cap, roughly double what it was during the dot-com boom. That weight has a direct consequence: chips increasingly explain the day-to-day movement of the major US indices.
Memory Names as the Market's Steering Wheel
Treat memory stocks as a subsegment of the semiconductor sector and measure them against the S&P 500, and the correlation over the last three months runs around 0.85. Square that number and you get the coefficient of determination, which lands in the low 70% range. The math says something concrete: if you know what memory stocks are doing, that alone can account for roughly three-quarters of the S&P 500's daily movement.
This makes sense once you watch the names in motion. SanDisk and Micron routinely swing in double-digit percentage terms on a daily basis, and they do it fairly frequently. Micron now carries a trillion-dollar market cap. When a company that size moves that violently and that often, its influence on the index is not a surprise. This is the most important segment for the market right now, and it continues to be.
The broader point is that both the tech-heavy NASDAQ and the S&P 500 lean hard on the same handful of forces. The Magnificent Seven, the chip stocks, and the memory names push the averages one direction or another. There is real hope for the market broadening out into more diversified leadership, but for now these are the drivers. Holding memory through June was not comfortable, since that month treated the group poorly. The Magnificent Seven has been stellar over a longer stretch, yet 2026 has not been a strong year for that basket either. Micron has also shown up as a possible holding in some of the Trump accounts, which is worth tracking as the group develops.
The Hyperscaler Correlation That Flipped
One shift deserves emphasis even though it has come up before. Meta, Microsoft, and Alphabet last reported earnings on April 29th, in the early May window. Since then, the relationship between the hyperscalers and the AI infrastructure names has flipped. Before that reporting, when the hyperscalers were spending free cash flow on AI buildout, the market rewarded both sides: the companies cashing the checks and the companies spending the money on infrastructure. After those reports, the correlation broke down. What has been good for the Microns of the world has stopped being good for the Metas of the world. That divergence has held for the past two months, and whether it continues is a genuinely critical question for how the group trades from here.
A few more earnings dates matter this week. Samsung reports Tuesday. Outside of tech, names like Pepsi, Delta, and Levi's are also on the calendar.
Jobs Data Softens the Hawkish Lean
The latest jobs data did some work to curb the hawkish momentum the street had been pricing into Federal Reserve policy. After the first comments from Kevin Warsh, which were sparse, the tone that came through skewed hawkish. That lent credence to the idea that interest rate moves could come sooner rather than later. The jobs report was not horrible, but it showed signs of cooling and a continuation of a slowing labor market. That was enough to push back on the hawkish momentum a little.
There is a second-order effect here. If the Fed offers fewer words and less explicit guidance, the market is more likely to react swiftly and sharply to the incoming data itself, since the data becomes the main thing moving expectations around.
What the Fed Minutes Might Reveal
Looking ahead, the Fed minutes land this week. Jay Powell is staying on board, which sets up a live question: what does a Kevin Warsh-led Fed bring, how does it re-evaluate its approach, and how much guidance does it withhold? With Powell still in place, there is the prospect of a genuine internal disagreement inside the committee, the kind sometimes described as a good family fight. Whether the rest of the Fed lines up behind Warsh is a wild card, and it could produce headwinds.
The most fascinating tension in the upcoming minutes is stylistic. Will they read like the minutes under Jerome Powell and Janet Yellen and their predecessors, or will they resemble what Kevin Warsh has already signaled, with an active internal fight visible underneath? The honest guess is that the minutes will be coy, and the FOMC will give very little that can be used to structure models or make grounded guesses about the path of monetary policy. That is only a guess, and guesses like it have been wrong before, so the actual document will settle it.
