Nine of 11 sectors advanced in Friday’s regular session, driven by cyclical strength in Materials and Energy. The Materials Select Sector SPDR Fund (NYSE: XLB) led the pack, rising 1.62%, while the Technology Select Sector SPDR Fund (NYSE: XLK) fell 1.28%, creating a notable divergence between commodity-linked stocks and growth-oriented tech names.

Market snapshot

Major averages displayed mixed performance during the session. The State Street SPDR Dow Jones Industrial Average ETF Trust (NYSE: DIA) gained 0.42%, contrasting with a 0.92% drop in the Invesco QQQ Trust, Series 1 (NASDAQ: QQQ). The State Street SPDR S&P 500 ETF Trust (NYSE: SPY) remained nearly flat, down 0.06%, while the iShares Russell 2000 Index Fund (NYSE: IWM) slipped 0.28%.

Prices as of 11:00 am ET; quotes delayed 15 minutes.

Leading sectors

The Materials Select Sector SPDR Fund (NYSE: XLB) posted the strongest performance among all sectors. Large-cap contributors included Newmont Corp (NYSE: NEM), which rose 3.32%, alongside Linde PLC (NASDAQ: LIN) at 1.65% and Air Products and Chemicals Inc (NYSE: APD) at 1.36%.

The Energy Select Sector SPDR Fund (NYSE: XLE) followed closely with a 1.14% gain. EOG Resources Inc (NYSE: EOG) led the group, up 2.28%, supported by SLB Ltd (NYSE: SLB) rising 2.09% and ConocoPhillips (NYSE: COP) advancing 1.71%.

Financials also showed resilience, with the Financial Select Sector SPDR Fund (NYSE: XLF) climbing 0.99%. JPMorgan Chase & Co (NYSE: JPM) added 2.29%, while Bank of America Corp (NYSE: BAC) and Berkshire Hathaway Inc. New Common Stock (NYSE: BRK.B) gained 1.40% and 1.00% respectively.

Lagging sectors

Technology faced the heaviest selling pressure, with the Technology Select Sector SPDR Fund (NYSE: XLK) declining 1.28%. Key underperformers included Oracle Corp (NYSE: ORCL), which fell 2.91%, Broadcom Inc (NASDAQ: AVGO) down 1.74%, and Microsoft Corp (NASDAQ: MSFT) slipping 0.92%.

Communication Services also retreated, with the Communication Services Select Sector SPDR Fund (NYSE: XLC) dropping 0.50%. Netflix Inc (NASDAQ: NFLX) led the decline, falling 2.17%, followed by Meta Platforms Inc (NASDAQ: META) at 1.81% lower and Alphabet Inc (NASDAQ: GOOGL) down 1.27%.

Health Care was the weakest of the advancing sectors, with the Health Care Select Sector SPDR Fund (NYSE: XLV) gaining just 0.23%. Despite the modest sector rise, large caps like Eli Lilly and Co (NYSE: LLY) and Johnson & Johnson (NYSE: JNJ) each rose approximately 1.34%.

What the numbers show

The 2.90-point spread between the top performer, Materials (+1.62%), and the bottom performer, Technology (-1.28%), exceeds three times the range of movement seen in the major averages. This dispersion indicates that broad index performance masks significant internal rotation, as capital shifted decisively from high-growth technology stocks toward cyclical commodities and financials.

US equities delivered smaller price swings than options markets predicted during the July to September 2026 earnings season. Implied moves increased significantly while actual volatility remained subdued, creating a historic disconnect.

Widest pricing gap since 2022

Data covering 1,811 earnings events shows that option prices asked for 22% more movement than the same period last year. In contrast, stocks delivered only 4% more actual movement. This divergence resulted in the largest gap between priced and realized volatility since the 2022 bear market.

The median expected move rose to 9.7% from 8.0% in the prior year. Meanwhile, the typical delivered move edged up slightly to 7.7% from 7.4%. The discrepancy indicates that market participants paid a premium for drama that largely failed to materialize.

Sector and individual stock performance

Financials recorded the poorest performance against their own historical norms. Banks and insurers cleared their expected move only 23% of the time, compared to their typical rate of 35%. This suggests options were priced for significant mid-July volatility that did not occur.

Individual cases illustrate the range of outcomes:

• Moody's Corp (NYSE: MCO): Options priced a ±7.7% move, which was 75% higher than its average. The stock’s maximum intraday swing was 1.6%, closing down 0.2%.
• Salesforce Inc (NYSE: CRM): Options priced a ±7.2% move. The stock swung 23.8% at its peak and closed up 22.6%, exceeding expectations by more than triple.
• Dominion Energy Inc (NYSE: D): Priced for ±4.7%, it moved only 0.8%.
• Albertsons Companies Inc (NYSE: ACI): Priced for ±5.6%, it fell as much as 24.5%.

What the Numbers Show

A counterintuitive pattern emerged when correlating market calm with option accuracy. Historically, lower volatility indices (VIX) correlate with higher rates of stocks beating their expected moves. However, Q2 2026 broke this trend. Despite a calm market where the VIX never closed above 21, and nearly 80% of reports occurred in the VIX 15–20 range, the beat rate dropped to 36%. In previous cycles, this VIX range typically yielded a 44% beat rate. This indicates that overpricing persisted even without the fear premium usually associated with high-volatility environments.

Implications for upcoming seasons

Approximately 288 stocks, or one in six, exceeded their expected move by half again or more. While these companies saw their expected moves drift down by about 7% post-report, historical data suggests they will be repriced upward by roughly 10% above their norm before their next earnings release. Investors are advised to scrutinize expected moves against individual stock histories rather than relying solely on market-wide volatility levels.