Rotations widen as investors shift toward quality and diversification

Summary

Highlights

The start of earnings season has been accompanied by greater dispersion in performance across and within sectors.
At the sector level, previously lagging areas are starting to lead. Within the AI trade, investors are rotating from the most expensive segments towards other parts of the value chain.
Amid widening dispersion, investors should focus on quality stocks and sector diversification.

2026.07.17-Weekly market directions-Header-EN

Source: Amundi Investment Institute, Bloomberg,as at 17 July 2026. Indices rebased to 100.

In this edition

In US equities, recent weeks have shown that despite low market volatility, single stock volatility is rising, as investors increase scrutiny. Market expectations for the upcoming earnings season are high, leaving the market vulnerable to some fragility in case of disappointment. In the technology sector, investors will pay particularly close attention to companies exposed to the shift in customers’ spending towards chips and servers, as well as those that have already deployed significant AI investments. In addition, the recent weakness in semiconductors suggests that markets are also rotating away from chips – the main early beneficiary of AI investments – towards other segments of the AI value chain, including infrastructure, power and applications, in search of new opportunities. This is helping other sectors, such as financials and defensives to lead, while tech stocks ease back from record highs.

Key dates

22 Jul

UK CPI and PPI, JP trade balance

23 Jul

South Korea GDP, ECB policy rate, EZ Consumer Confidence

24 Jul

Japan CPI, UK retail sales, EZ and UK PMI, ECB Inflation Expectations

Read the full article on the Amundi Research center

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