By David French
(Reuters) – It rose to close at a record high on Wednesday, 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. financials driven by strong earnings.
It was the third time in four sessions that the Dow Jones recorded the best result in its history, finishing again above 43,000 points and recovering from the losses of the previous session.
Also one step away from setting another closing milestone was the , but it ultimately finished just below, up 27.21 points, or 0.47%, to 5,842.47 points.
They rose 51.49 points, or 0.28%, to 18,367.08. The Dow Jones Industrial Average rose 337.28 points, or 0.79%, 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 posted a record close, jumping 6.5%, after joining peers like JPMorgan Chase (NYSE 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 (NYSE rose 4.1% and US Bancorp advanced 4.7% after reporting third-quarter results.
The broader banks index rose 1.2% and an index tracking regional banks gained 1.5%.
Investors also focused on small-cap stocks, with some rotation from expensive tech mega-caps to less expensive sectors.
The index rose 1.6% and the S&P Small Cap 600 gained 1.4%. 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 Big tech names that dragged down stocks, Apple (NASDAQ fell 0.9% after hitting an all-time high in the previous session. Alphabet (NASDAQ , Meta Platforms (NASDAQ ) and Microsoft (NASDAQ fell between 0.2% and 1.6%.
Chip heavyweight Nvidia (NASDAQ , however, resisted the mega-cap slide, rising 3.1% after falling nearly 5% 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 highs at the close: financials, utilities, materials and industrials.
Utilities led sector gains, with a 2% jump, with Dominion Energy's (NYSE:) 5.1% rise among the catalysts after it was one of the electric companies with which amazon.com (NASDAQ:) 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 rose 1.9%, boosted by United Airlines' best daily performance in six months. It gained 12.4% after forecasting better-than-expected fourth-quarter earnings and announcing a $1.5 billion share buyback program on Tuesday.
Delta Air Lines (NYSE and American Airlines (NASDAQ ) also benefited, advancing 6.8% and 7.1%, 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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