Dow claims record closing high, S&P 500 advances; chip sell-off weighs on Nasdaq

[NEW YORK] Wall Street advanced on Thursday (Jun 4) as progress towards ending the Iran war buoyed investor sentiment, while disappointing results from Broadcom led a chip sell-off that pulled the Nasdaq lower.

The blue-chip Dow surged, hitting a record closing high with a boost from healthcare and financial stocks.

The S&P 500 posted more muted gains, while the Nasdaq ended nominally lower on the day. Chipmaker Broadcom missed revenue expectations, sending its shares tumbling 12.6 per cent and casting a pall over the AI frenzy, which has sent chip stocks up over 92 per cent so far this year.

“About the only blemish on the market at this point is Broadcom, and I think investors are buying the dip,” said Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest in Elmhurst, Illinois. “I don’t think investors have given up on chips yet, but what they have yet to come to grips with, ‘Is this real? Are these valuations legitimate?’ I’m not sure yet that investors have really questioned that.”

The US House of Representatives passed a measure on Wednesday that would block US President Donald Trump from continuing the war on Iran. Additionally, a US-mediated ceasefire agreement between Israel and Lebanon, an essential condition of an Iranian agreement to a peace deal, bolstered optimism of a near-term resolution to the war. But the truce was rejected by the pro-Iran Hizbollah, which said it would not withdraw troops from Lebanon.

A drop in front-month crude futures reflected hopes that tanker traffic through the crucial Strait of Hormuz could shortly resume.

“How many deals have we had? It’s always right around the corner, a corner we have yet to reach,” Nolte added. “Things are moving, but are they moving at a pace that’s going to allow the world to get back to what passes for normal in a few weeks, a few months, or maybe sometime next year?”

On the economic front, initial jobless claims unexpectedly rose 6.1 per cent, and first-quarter labour costs and productivity were revised sharply lower. A report from Challenger, Gray and Christmas showed layoffs announced by US corporations jumped 11 per cent in May to 97,006. Nearly 40 per cent of those layoffs were attributed to AI.

The Dow Jones Industrial Average rose 874.86 points, or 1.73 per cent, to 51,561.93, the S&P 500 gained 30.63 points, or 0.41 per cent, to 7,584.31 and the Nasdaq Composite lost 23.02 points, or 0.09 per cent, to 26,830.96.

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Among the 11 major sectors of the S&P 500, healthcare and financial stocks boasted the biggest percentage gains, while technology shares were the biggest laggards.

Chipmaker Marvell Technology gained 4.9 per cent, while Advanced Micro Devices, Micron Technology and Qualcomm fell between 2.6 per cent and 7.7 per cent.

The healthcare sector got a boost from UnitedHealth, which jumped 5.2 per cent after Bank of America raised its rating on the healthcare conglomerate’s shares to “buy.”

The financial index’s rebound followed a sharp sell-off in the previous session due to revived concerns over private credit. Blackstone became the latest asset manager to cap withdrawals from its flagship private credit fund following a rise in redemption requests. Its shares rose 7.5 per cent.

Cybersecurity firm CrowdStrike slumped 3.8 per cent after reporting an increase in quarterly operating expenses. An investor roadshow for Elon Musk-led SpaceX began on Thursday ahead of its market debut on June 12. It aims to raise US$75 billion in a record IPO that would value it at US$1.75 trillion.

Advancing issues outnumbered decliners by a 2.19-to-1 ratio on the New York Stock Exchange. There were 308 new highs and 145 new lows on the NYSE.

On the Nasdaq, 3,082 stocks rose and 1,681 fell as advancing issues outnumbered decliners by a 1.83-to-1 ratio.

The S&P 500 posted 24 new 52-week highs and 11 new lows, while the Nasdaq Composite recorded 100 new highs and 92 new lows.

Volume on US exchanges was 18.77 billion shares, compared with the 20.11 billion average for the full session over the last 20 trading days. REUTERS