U.S. stocks were mixed on Thursday as investors rotated out of big tech and into more defensive sectors, sending the Dow Jones Industrial Average higher while the Nasdaq struggled due to a major semiconductor sell-off. The Dow jumped more than 900 points, 1.8%, fueled by strong gains in financial and healthcare stocks. Meanwhile, the S&P 500 managed a modest advance despite weakness in technology, while the Nasdaq Composite slipped into negative territory as investors reassessed expectations for the AI trade following Broadcom's latest earnings report.
While enthusiasm around AI remains a powerful driver for many stocks, investors are becoming increasingly selective after a months-long rally that pushed many AI-linked companies to record highs. At the same time, uncertainty surrounding U.S.-Iran negotiations and rising oil prices continued to influence sentiment.
Market Movers:
- Broadcom (AVGO) -15%: Shares plunged after investors reacted negatively to the chipmaker's AI revenue outlook despite another quarter of strong growth. While Broadcom delivered earnings and revenue above Wall Street expectations, the results failed to justify the lofty expectations built into the stock after its massive run higher.
- UnitedHealth (UNH) +6%: The healthcare giant rallied after receiving an analyst upgrade and benefiting from signs that medical cost trends may be stabilizing. Investors also welcomed a dividend increase, helping drive renewed interest in defensive healthcare names.
- Redwire (RDW) +17%: Shares surged after the company secured a contract tied to agricultural research aboard the International Space Station. The deal highlights Redwire's growing presence in commercial space infrastructure and emerging space-based research markets.
- CrowdStrike (CRWD) -9%: The cybersecurity leader fell despite posting strong quarterly results and raising guidance. Investors appeared to lock in profits after the stock's remarkable rally over the past month, as elevated expectations overshadowed an otherwise impressive report.
- Ciena (CIEN) -20%: Shares tumbled even after reporting better-than-expected earnings and revenue growth. Concerns over future margins and profitability projections ultimately outweighed the company's strong top-line performance.
- PVH Corp. (PVH) -25%: The apparel maker suffered steep losses after lowering its full-year outlook. Management cited ongoing geopolitical challenges and tariff-related pressures that are expected to weigh on profitability.
Market Rotation Takes Hold
Financials, healthcare companies, and other value-oriented sectors attracted fresh buying interest as investors reduced exposure to some of the year's biggest technology winners. The shift helped power the Dow significantly higher even as technology stocks struggled. Major financial institutions benefited from expectations for increased capital markets activity, while healthcare names drew interest as investors sought more stable earnings profiles amid growing geopolitical uncertainty.
Labor Market Data Sends Mixed Signals
Fresh economic data showed jobless claims climbed to 225,000 last week, the highest level since February. While the increase suggests some softening in the labor market, claims remain historically low and continue to point to a relatively stable employment backdrop. Investors are now focused squarely on Friday's nonfarm payrolls report, which could provide critical clues about the strength of the economy and the Federal Reserve's next move on interest rates. Any signs of labor market deterioration could shift expectations for monetary policy in the months ahead.
Geopolitical Risks Remain in Focus
Markets also continued monitoring developments in the Middle East after hopes for a quick resolution to tensions between the U.S. and Iran faded. Rising oil prices and renewed military activity have complicated the outlook for inflation, creating another variable for investors already navigating a rapidly evolving economic environment. Meanwhile, excitement continues to build around SpaceX's upcoming IPO, which is expected to be one of the largest public offerings in recent history. The listing has generated significant interest across Wall Street and could become an important catalyst for market activity in the weeks ahead.
Looking Ahead
Investors now face a critical end to the week, with Friday's jobs report likely setting the tone for markets heading into mid-June. A stronger-than-expected labor reading could reinforce confidence in economic growth but also reignite concerns about inflation and interest rates. At the same time, traders will continue watching developments in the Middle East, oil prices, and the health of the AI trade after Broadcom's disappointing market reaction. With record highs still within reach for major indexes, the next phase of the rally may depend less on broad enthusiasm and more on whether corporate earnings and economic data can continue to justify elevated valuations.