U.S. stock markets closed mixed this week as a pronounced rotation out of technology stocks weighed on the Nasdaq Composite, while the Dow Jones Industrial Average surged to a fresh intraday record. The divergence underscores a market in transition, with investors favoring defensive and cyclical sectors over high-growth tech names amid stable inflation data and shifting Federal Reserve expectations.
On Tuesday, the Dow rose 0.36% (about 120 points) as industrials and financials led gains, but the Nasdaq fell 0.43% and the S&P 500 slipped 0.09%. The pattern intensified on Thursday: the Nasdaq declined 0.46%, the S&P 500 hovered near flat, while the Dow added 72 points (0.1%) to set a new all-time intraday high. Healthcare, financials, and industrials drove the blue-chip index, with Johnson & Johnson and JPMorgan Chase up over 1% and 2%, respectively, and Caterpillar climbing 5%.
Big Tech under pressure — Apple tumbled 5% after announcing price hikes on MacBook and iPad products, citing rising component costs such as semiconductors. Microsoft fell nearly 4% on Xbox console price increases, while Alphabet and Meta dipped about 1% as investors weighed potential margin compression from costlier chips. Semiconductors, however, were a bright spot: Micron Technology soared 14% on strong fiscal third-quarter results and an upbeat forecast, and Qualcomm gained 6% after raising its non-handset revenue outlook for fiscal 2029. The Philadelphia Semiconductor Index rose 3.59% and is on track for its best quarter on record.
Inflation data meets expectations — The core personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, rose 0.3% month-over-month and 3.4% year-over-year in May, both matching forecasts. Headline PCE climbed 0.4% monthly and 4.1% annually. Although core inflation hit its highest since October 2023, investors were relieved that readings did not exceed estimates, especially given upward energy-cost pressures from geopolitical tensions. Treasury yields edged lower, with the 10-year yield slipping to 4.384%. Markets still price in at least one interest rate increase before year-end, according to LSEG data.
Oil prices rose as a vessel was reportedly hit by an unidentified projectile in the Strait of Hormuz, raising supply concerns. Meanwhile, value-oriented sectors attracted bids — industrials led the S&P 500 with a 1.9% gain, while consumer discretionary and staples lagged. Bio-Techne Corp jumped on news that Germany’s Merck KGaA would acquire it for $11.3 billion.
For investors, the mix of record Dow levels and tech weakness highlights the need for diversification. With earnings season progressing and key economic reports ahead, sector-level volatility is expected to persist.
