Dow Hits Record High as Investors Rotate Away from Tech; Broadcom Miss Triggers Sector Selloff
The Dow Jones Industrial Average surged 874 points to a record close of 51,561.93 on June 4, as investors rotated capital from technology stocks into healthcare and financial names. Broadcom's disappointing earnings report triggered a major shift in market sentiment away from AI-related chip stocks.
Market Rotation Drives Dow to New Records
The Dow Jones Industrial Average rallied to a fresh all-time 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 874.86 points, or 1.73%, for a record close of 51,561.93. The Nasdaq lost 0.09% and ended at 26,830.96, while the S&P 500 rose 0.41% to 7,584.31.
Broadcom Sparks Tech Retreat
The rotation was sparked by a sell-off in Broadcom that led investors to pare exposure to stocks with ties to artificial intelligence. Broadcom shares tumbled 15% after the chipmaker reported fiscal second-quarter revenue of $22.19 billion, short of the $22.27 billion expected from analysts polled by LSEG. This marked a significant reversal from months of AI-driven gains.
Winners in the Rebalancing
UnitedHealth led the Dow higher, rising more than 5%. JPMorgan Chase and Walmart added to the benchmark's advance, climbing 3% and nearly 1%, respectively. Non-tech names outside of the Dow such as Costco and Eli Lilly gained around 1% and more than 4%, respectively.
Labor Market Strength Complicates Outlook
Initial jobless claims hit their highest level since early February last week, the Labor Department reported Thursday. First-time filings totaled 225,000 for the week ending May 30, up 13,000 from the prior period and higher than the Dow Jones consensus estimate for 215,000. The week marked the highest level for claims since Feb. 7. Despite this uptick, the overall labor market continues to support equity valuations.