NEW YORK, August 11, 2026, 11:05 EDT
- The XSD semiconductor ETF, which is equal-weighted, rose over 2%.
- The Nasdaq Composite edged down by 0.1%, resulting in a two-point difference in performance.
- XSD comprises 48 stocks, with none accounting for more than 3.1% as of late July.
- The upcoming CPI report on Wednesday will serve as the next key test for high-multiple chip stocks.
Semiconductor stocks outperformed the Nasdaq early Tuesday. The State Street SPDR S&P Semiconductor ETF (NYSEARCA:XSD) rose over 2%, as the Nasdaq Composite eased 0.1%. Leading chipmakers included Teradyne NASDAQ:TER and KLA NASDAQ:KLAC.
The gap provides the indicator. XSD tracks a revised equal-weight index, so its surge indicates broad-based demand among chip stocks, rather than a sharp climb in Nvidia NASDAQ:NVDA or any other large-cap name.
Market breadth is crucial as indexes approach all-time highs. In early trading, the S&P 500 remained unchanged, the Dow advanced about 0.2%, while the Nasdaq slipped 0.1%. Investors shifted positions inside the equity market instead of driving broader gains.
| Market gauge | Morning move | What it showed |
|---|---|---|
| SPDR S&P Semiconductor ETF (NYSEARCA:XSD) | Gained more than 2% | Chips led broader sector gains |
| S&P 500 | Unchanged to up 0.1% | Remained close to all-time high |
| Dow Jones Industrial Average | Rose about 0.2% | Lifted by industrials, utilities |
| Nasdaq Composite | Down 0.1% | Lagged chip stocks among mega-caps |
At 10:31 EDT, IBD covered the gain in XSD and highlighted sector leaders. Meanwhile, AP separately noted that the major indexes were nearly unchanged. At that moment, the gap between XSD and the Nasdaq was over two percentage points.
XSD offers notable utility for diversified exposure. S&P Dow Jones Indices describes the benchmark as modified equal weighted. At the most recent review, the index comprised 47 members and is adjusted every quarter.
| XSD characteristic | Latest published figure | Investor read-through |
|---|---|---|
| Fund holdings | 48 | Covers a wider selection than a typical mega-cap chip group |
| Largest holding weight | 3.07% | No individual stock outweighs the rest |
| Forward price/earnings | 28.60 times | Expectations for growth stay high |
| Price/book | 5.08 times | Current valuations offer limited cushion |
| Estimated 3–5 year EPS growth | 37.77% | Growth estimates justify the higher valuation |
| Gross expense ratio | 0.35% | Cost to investors without fee reductions |
State Street released fund data as of either July 24 or July 27, based on the metric in question. The data illustrates the trade-off well: higher anticipated earnings growth comes with a forward price-to-earnings ratio close to 29.
The portfolio diversifies its exposure as well. Advanced Micro Devices NASDAQ:AMD represented the biggest holding but comprised only 3.07%. Ambarella NASDAQ:AMBA, Impinj NASDAQ:PI, Allegro MicroSystems NASDAQ:ALGM, and Micron Technology NASDAQ:MU were the next largest constituents.
| Top XSD holding | Weight as of July 24 |
|---|---|
| Advanced Micro Devices NASDAQ:AMD | 3.07% |
| Ambarella NASDAQ:AMBA | 2.89% |
| Impinj NASDAQ:PI | 2.75% |
| Allegro MicroSystems NASDAQ:ALGM | 2.75% |
| Micron Technology NASDAQ:MU | 2.75% |
| Nvidia NASDAQ:NVDA | 2.73% |
| Broadcom NASDAQ:AVGO | 2.72% |
The State Street holdings reinforce the interpretation of breadth seen on Tuesday. The seven largest positions made up under 20% of the fund. As a result, a 2% move in the ETF signals momentum from multiple areas within the sector.
The outlook for cap-weighted technology remains mixed. The Invesco QQQ Trust NASDAQ:QQQ had climbed 8.9% from July 29 until before Tuesday. Mark Newton, Fundstrat’s head of technical strategy, described the recovery as “stalling out.” MarketWatch
| Fundstrat QQQ positioning | Level or signal |
|---|---|
| Increase since July 29 | 8.9% |
| Current market state | Rally “stalling out” |
| Technical formation | Triangle pattern |
| Upside target | 740–745 |
| Needed direction | Triangle breaks higher |
Newton stated that a move higher “should lead to gains back to test 740–745.” The XSD’s performance on Tuesday provides initial signs that chip sector breadth could strengthen ahead of another Nasdaq breakout.
Borrowing costs continue to stay high. The 10-year Treasury yield slipped to 4.68%, down from 4.72% late Monday. That level remains well above the 3.97% mark seen prior to the Iran war, AP reported. High-duration semiconductor valuations remain exposed to movements in that spread.
Risks: Momentum in equal-weight shares may lose steam rapidly should selling in mega-cap tech stocks intensify. Higher-than-expected CPI data may drive Treasury yields upward, putting pressure on chip valuations. XSD trades at 28.6 times forward earnings, giving investors limited protection if earnings estimates decline.
The upcoming test is July’s CPI release on Wednesday. Economists forecast inflation slowing to 3.4% year-on-year, down from 3.5%. A clearer bullish confirmation would be XSD maintaining its two-point advantage as QQQ exits Newton’s triangle.
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