Dow leads Wall Street higher as healthcare stocks hit record
The Dow led Wall Street higher on Tuesday as investors rotated into healthcare and other value sectors, while technology lagged. Healthcare hit a record high, boosted by Eli Lilly, UnitedHealth and others, as investors sought opportunities outside tech amid AI spending concerns.
The Dow led Wall Street higher on Tuesday as investors focused on value stocks such as healthcare, while technology lagged after rebounding a day earlier, according to preliminary data.
Healthcare led gains among the S&P 500's 11 major sector indexes, hitting a record high. Eli Lilly boosted the benchmark index along with Dow components UnitedHealth, Merck & Co, Johnson & Johnson and Amgen. Vaccine company Moderna hit its highest level since 2022.
Defensive sectors such as real estate and utilities were also outperforming, along with the small-cap Russell 2000 index. Declines in megacap stocks pulled the communication services sector down, while energy shares underperformed as oil prices dipped after touching a five-month high. Oil traders were weighing a meeting between the Iranian president and Pakistan's army chief, a key US-Iran mediator, against Houthi attacks on Saudi infrastructure and reports of vessel attacks in the Gulf.
Trading was muted in the heavyweight technology sector, which had rebounded on Monday from a selloff last week. Technology investors have been worried about steep spending and financing costs for AI developments.
"Equity investors are still a little skeptical around the AI trade and the ability for some of these companies to monetize their investments, so you're seeing a bit of a rotation into other areas of the market," said Jim Baird, chief investment officer at Plante Moran Financial Advisors, pointing to advances on Tuesday in small caps and sectors including healthcare.
"Investors are looking for other opportunities outside of tech, and healthcare is one of the beneficiaries of that," he said.
According to preliminary data, the S&P 500 gained 23.79 points, or 0.31 per cent, to end at 7,714.52 points, while the Nasdaq Composite lost 9.05 points, or 0.03 per cent, to 26,421.84. The Dow Jones Industrial Average rose 547.95 points, or 1.05 per cent, to 52,513.98. The S&P 500 value index was outperforming its growth counterpart on the day.
Investors were looking ahead to earnings reports from SpaceX and Netflix, due after the market close. Meta and Tesla are scheduled to report on Wednesday. Meta and Netflix shares were among the weakest stocks in communication services on Tuesday, along with Alphabet.
General Motors shares dropped after the automaker signaled pressure in coming months from higher commodity costs and lower truck sales. 3M rose after the company said it was expanding its data-center partnership with Amazon and issued a warrant to an Amazon subsidiary to purchase 3M common stock worth over $521 million. The industrial conglomerate also raised its full-year profit forecast.
Credit reporting firm Equifax rallied after it reported third-quarter profit above analysts' estimates. Shares in Hasbro also jumped after the toymaker raised its full-year forecast for both overall revenue and its digital gaming business.