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The Dow Jones Industrial Average hit a new record high during Thursday’s trading, surging more than 870 points to close above 51,500 for the first time in its history, in a session that saw a clear shift in investor sentiment away from technology and artificial intelligence stocks towards traditional value stocks.
The index rose by approximately 874 points, or 1.7%, to close at a record high of 51,561.93. In contrast, the S&P 500 posted a modest gain of 0.4%, while the Nasdaq Composite fell by 0.1%, weighed down by the poor performance of technology and semiconductor stocks.
These movements reflect what is known in the markets as “sector rotation,” where investors move their funds from one group of stocks to another without exiting the market entirely. This time, the liquidity has shifted from companies related to artificial intelligence and semiconductors to more traditional sectors such as healthcare, banking, and consumer goods.
The healthcare sector was among the biggest gainers during the session, with UnitedHealth Group shares jumping more than 5%, leading the Dow Jones’ gains. JPMorgan Chase shares also rose by about 3%, while Walmart shares added nearly 1% to its market value.
Conversely, the semiconductor sector came under significant pressure after Broadcom’s stock plummeted by more than 12% following the release of financial results showing lower-than-expected revenue for the second fiscal quarter. This disappointing performance triggered a wave of profit-taking that extended to several chip companies that had been among the biggest beneficiaries of the artificial intelligence boom this year.
The semiconductor sector is one of the main drivers of the record highs that US stocks have seen in recent months, so any signs of weakness from leading companies usually prompt investors to reduce their investment positions in the entire sector.
Despite the strong performance of the Dow Jones index, markets preferred to adopt a more cautious approach as the release of the US jobs report for May approached, which is one of the most important economic indicators that the Federal Reserve relies on to assess the state of the economy and make monetary policy decisions.
US stock futures edged lower after Thursday’s session ended, as investors shifted their focus from corporate earnings and the artificial intelligence portfolio to awaited labor market data.
Estimates suggest that the US economy added about 80,000 new jobs during May, compared to 115,000 jobs in April, while the unemployment rate is expected to remain stable at 4.3%.
Despite a temporary dip in technology stocks, the overall picture for US markets remains positive. The S&P 500 is on track for its tenth consecutive week of gains, a winning streak not seen since 1985, reflecting continued investor confidence in the strength of the US economy and the ability of companies to achieve sustainable earnings growth.
Investors are now awaiting the results of the jobs report as the most influential factor on market trends in the coming period, since continued strength in the labor market may support economic growth, but at the same time it may push the Federal Reserve to keep interest rates high for a longer period, which may redraw the map of investment flows between different sectors.
