Dow surges 900 points to record as Broadcom drags Nasdaq lower

The Dow Jones Industrial Average surged 912 points, or 1.8%, to a record close of 51,599 on Thursday, while the Nasdaq Composite slipped 0.2% as Broadcom's earnings failed to satisfy the market's insatiable appetite for AI growth.

"The rotation out of tech into value is the defining trade of the session," said Dustin Thackeray, chief investment officer at Crewe Advisors. "Broadcom earnings were good news other than the fact that their guidance wasn't what the market may have expected. The chips are due for a bit of a breather after a tremendous run-up from end of March lows."

Nine of the 11 S&P 500 sectors finished in the green, led by healthcare and financials. UnitedHealth Group jumped 6.06%, Humana gained 6.70%, and Centene rose 6.52%. The S&P 500 added 0.3% to 7,561, while the Russell 2000 climbed 1.19% to 2,922.52. At the other end of the spectrum, Broadcom cratered 15.26% — on track to shed roughly $320 billion in market value — after CEO Hock Tan declined to raise the company's full-year target of $100 billion in AI chip revenue. CrowdStrike slid 8.79% after reporting a rise in first-quarter operating expenses, and Micron Technology fell 7.35%.

The divergence marks a stark reversal from recent weeks. The S&P 500 had surged more than 16% over April and May, a two-month run that Deutsche Bank Research noted has only occurred four other times since World War II — the last instance outside a recession being the months before the 1987 crash. The Shiller cyclically adjusted price-to-earnings ratio now stands at 42.53, its second-highest level since the 1999 peak of 43.21 that preceded the dot-com bust.

The Dow's rally was powered by a broad shift away from technology and into defensive and value-oriented names. American Express and Merck were among the top contributors, alongside UnitedHealth. The rotation accelerated as oil prices retreated $3.19 to $92.83 a barrel, easing inflation concerns that had weighed on the broader market earlier in the week. Bitcoin fell $527 to $63,512.

HSBC analysts flagged a slide in chip prices and a slowdown in AI spending and rollout as among their "biggest worries," according to CNBC. Bank of America and UBS struck a more bullish tone on Broadcom, framing the unchanged outlook as conservatism driven by supply constraints rather than softening demand. Jefferies called the print mixed, flagging ongoing gross margin pressure as the custom ASIC business scales.

The rally on Wall Street had stalled earlier this week as investors weighed renewed hostilities between the US and Iran. Although the two sides agreed to a ceasefire in early April, talks to end the war and reopen the Strait of Hormuz have made little progress, keeping oil prices elevated. Weekly jobless claims increased more than expected, ahead of Friday's monthly employment report that will give new Federal Reserve Chairman Kevin Warsh his first read on the labor market. Traders now see a 75% chance of a 25-basis-point rate hike before year-end, according to LSEG data.

This article is for informational purposes only and does not constitute investment advice.