By Traders work on the floor of the New York Stock Exchange (NYSE) on July 24, 2024 in New York City.
Spencer Platt | Getty Images
The S&P 500 rose on Thursday as Wall Street attempted to recover from the index’s worst session since 2022.
The S&P 500 rose 0.4%, while the Nasdaq Composite added 0.1%. The Dow Jones Industrial Average jumped 300 points, or 0.7%, led to the upside by a 4% jump in IBM. The Russell 2000 gained 1.9% as investors continued their rotation into small caps.
Investors ditched some of 2024’s winning tech names for a second day, dragging down the S&P 500’s information technology 1%. Nvidia slumped 2%, while Super Micro Computer declined about 2%. The VanEck Semiconductor ETF shed 2%. Megacap stocks Meta Platforms, Microsoft and Alphabet fell about 1% each.
“There’s a changing of the guard happening on Wall Street. The AI stocks, that led on the way up, are now leading on the way down,” said Adam Sarhan, CEO of 50 Park Investments, adding that movements like are common during a bull market “great mini rotation.”
“During bull markets, you see one sector lead, then it pauses, corrects, and passes the baton,” he said. “Think of it like a relay race over to another sector.”
Investors also assessed a second-quarter GDP report that showed the economy grow 2.8%, and much more than expected. Economists surveyed by Dow Jones had anticipated growth of 2.1%.
Wednesday’s trading session saw intense declines for the S&P 500 and the Nasdaq Composite, driven by disappointing quarterly reports from Alphabet and Tesla. Both the broad-market index and the tech-heavy benchmark posted their worst session since 2022, while the Dow shed roughly 504 points.
Investors have come to view the recent declines as a sign of an overdue correction in an overbought market, which is now seeing a rotation away from megacap tech into small-cap stocks and more cyclical areas.
Ford Motor shares tumbled 16% after the company’s second-quarter earnings came in much lower than analysts expected. Chipotle slipped 3% despite topping earnings and revenue expectations, while ServiceNow popped 11% on stronger-than-expected earnings.
