The Dow Posted a Fourth Straight Winning Month While Chips Lost a Trillion

July closed on Friday with the S&P 500 higher on the day, Amazon surging, and the Dow booking its fourth consecutive winning month. Read only that line and it was a good month. Read the semiconductor complex and it was one of the worst on record. Both descriptions are of the same thirty-one days.

The damage was concentrated and severe. Chip stocks shed more than a trillion dollars of market value between Friday the 24th and Wednesday the 29th alone. Across July the Philadelphia semiconductor index fell 19.4 percent, a memory-focused ETF 29, Micron 22 and SanDisk 43. Nvidia gave up 238 billion dollars over the rout and closed Wednesday at 190.01 after losing the most valuable company title to Apple.

Korea took the worst of it because Korea is the most concentrated. The Kospi fell 32.54 percent over the month, a steeper drawdown than 2008, tripping circuit breakers on the 28th and again on the 29th, the first consecutive-day halts in the index's history. Samsung lost about 35 percent and SK Hynix 46.69, and the finance ministry convened an emergency meeting on Wednesday evening after 864.5 trillion won left the market in two sessions.

None of that was earnings. SK Hynix reported record revenue and fell. Samsung reported an operating margin of 52.2 percent, warned that the memory shortage worsens through 2027 and into 2028, ran up almost 8 percent on the news and closed lower. What was being sold was 2028: China's CXMT listing at a 466 percent gain and a Shanghai firm starting production of immersion DUV lithography tools, both on the 27th.

Meanwhile the parts of the market with no exposure to any of that did fine. The Dow's fourth straight winning month came from industrials, energy and financials, and energy was the best performing US sector on Wednesday at plus 1.9 percent while nine of eleven closed red. The FTSE 100 had its strongest month since February at plus 4.5 percent. Oil doing 29 percent on the month turns out to be a decent hedge against an AI unwind, which is not a sentence anyone expected to write in January.

So the index level told you almost nothing this month. A trillion dollars left one part of the market and the headline barely moved, which is what happens when the losses are concentrated in the names that had run the furthest. Anyone reading July off the Dow missed the entire story.