S&P 500 futures fall as Broadcom leads chip stocks lower: Live updates
The Dow Jones Industrial Average rallied to a fresh record high on Thursday, while the Nasdaq Composite underperformed as investors appeared to rotate out of chip names in favor of non-tech stocks.
The 30-stock Dow jumped 827 points, or 1.6%. The Nasdaq traded just below the flatline, while the S&P 500 rose 0.4%.
UnitedHealth led the Dow higher, rising more than 5%. JPMorgan Chase and Walmart added to the benchmark's advance, climbing 4% and 1%, respectively. Non-tech names outside of the Dow such as Costco and Eli Lilly gained more than 1% and more than 5%, respectively.
The rotation was sparked by a sell-off in Broadcom that led investors to pare exposure to stocks with ties to artificial intelligence. The chipmaker traded 14% lower after the it reported a fiscal second-quarter revenue miss. Semiconductor names, which led the latest leg higher in the market's rally to record levels, fell broadly. The VanEck Semiconductor ETF (SMH) lost almost 2%. Arm Holdings shed more than 5%, as did Micron Technology.
"After an astonishing earnings season, the AI trade is still alive and well, but this rally is getting tired after an incredible more than two-month surge," said Dennis Follmer, chief investment officer at Montis Financial. "With no end in sight for the stalemate in the Strait of Hormuz, we would not be surprised to see stocks stall for a while as that reality sinks in and it catches its breath from this recent streak."
Thursday's moves "suggest the early innings of a rotation and it's also a reminder that not all AI stocks are the same and there are different expectations built into each stock," he added.
This comes after a losing day on Wall Street, with stocks pressured by rising tensions in the Middle East. Attacks escalated between the U.S. and Iran. Iran struck Kuwait International Airport early Wednesday, while one day earlier U.S. Central Command said it had defeated multiple Iranian ballistic missiles and drones, and carried out "self-defense strikes" on Qeshm Island in the Persian Gulf. It said that this was in response to "attempted attacks" by Tehran.