US markets:The Dow Jones Industrial Average rose on Wednesday to close at a record high, and Wall Street’s two other benchmarks also finished higher, weathering declines in mega-cap tech stocks thanks to gains in small caps and stocks. financial stocks boosted by strong earnings.
It was the third time in four sessions that the Dow .DJI posted the best result in its history, finishing again above 43,000 points and recovering from the previous session’s losses.
Also one step away from setting another closing milestone was the S&P 500 .SPX, but it ultimately finished just short, up 27.21 points, or 0.47 percent, to 5,842.47 points.
The Nasdaq Composite .IXIC rose 51.49 points, or 0.28 percent, to 18,367.08. The Dow Jones Industrial Average .DJI advanced 337.28 points, or 0.79 percent, to 43,077.70.
On a largely positive day for Wall Street, it was financial stocks that led the way.
“I think investors have shifted a little bit from some of the big tech companies to the big financial companies,” said Michael Kantrowitz, chief investment strategist at Piper Sandler.
He said some movement by investors made sense as the rates environment has become more conducive to bank profits, while technology companies are pricing in a lot of optimism around artificial intelligence (AI).
Morgan Stanley MS.N posted a record close, jumping 6.5 percent, after joining peers such as JPMorgan Chase JPM.N in reporting strong profits following a sharp rise in investment banking revenue.
Larger regional banks, traditionally less dependent on investment banking activities, also rose. First Horizon FHN.N rose 4.1 percent and US Bancorp USB.Na advanced 4.7 percent after reporting third-quarter results.
The broader bank index .SPXBK rose 1.2 percent, and an index tracking regional banks gained 1.5 percent.
Investors also focused on small-cap stocks, with some rotation from expensive tech mega-caps to less expensive sectors.
The Russell 2000 index .RUT rose 1.6 percent and the S&P Small Cap 600 .SPCY gained 1.4 percent. Both had their highest results since November 2021.
While he acknowledged some buying in recent days, Piper Sandler’s Kantrowitz said he was not yet convinced of a broader rotation into small caps.
“I think people are broadening their portfolio exposure, but still maintaining the same kind of fundamentals,” adding that people were buying high-quality small-cap stocks but not delving into the kind of big-value names you’d expect. that would attract attention if the full rotation was underway.
Among the names of the great technologies that they dragged, Apple AAPL.O fell 0.9 percent after hitting a record high in the previous session. Alphabet GOOGL.O, Meta Platforms META.O and Microsoft MSFT.O fell between 0.2 percent and 1.6 percent.
Chip heavyweight Nvidia NVDA.O, however, resisted the mega-cap slide, rising 3.1 percent after falling nearly 5 percent in the previous session.
Gains in the so-called Magnificent Seven group of technology stocks have fueled most of Wall Street’s record run this year. However, with valuations tightening and economic prospects brightening, investors have been looking for opportunities elsewhere.
Four of the 11 S&P sectors posted all-time closing highs: Financials .SPSY, Utilities .SPLRCU, Materials .SPLRCM and Industrials .SPLRCI.
Utilities led sector gains, with a 2 percent jump, with Dominion Energy DN up 5.1 percent among the catalysts after it was one of the utilities with which Amazon.com AMZN .O announced agreements to develop nuclear technology to power data centers.
Kantrowitz, S&P’s second-best performing sector year-to-date, said he remains bullish on utilities as they benefit from both increased energy demand from AI and the environment. of lower interest rates.
The economically sensitive transportation index .DJT jumped 1.9 percent, boosted by United Airlines’ UAL.O, the best one-day performance in six months. It gained 12.4 percent after forecasting better-than-expected fourth-quarter earnings and announcing a $1.5 billion share buyback program on Tuesday.
Delta Air Lines DAL.N and American Airlines AAL.O also benefited, advancing 6.8 percent and 7.1 percent, respectively.
Attention now turns to more corporate results due out later in the week, along with key economic data, including September retail sales and industrial production figures, due out on Thursday.
Volume on US exchanges was 10.63 billion shares, compared to the average of 12.13 billion for the entire session over the last 20 trading days.
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