Dow hits record high as investors rotate out of AI chip stocks

The Dow Jones Industrial Average climbed to a record closing high on Thursday as investors shifted money into healthcare and financial stocks, while a broad selloff in semiconductor shares weighed on the technology-heavy Nasdaq Composite.

The blue-chip index rose 875.09 points, or 1.73%, to close at 51,562.16.

The S&P 500 gained 0.41% to 7,584.82, while the Nasdaq Composite slipped 0.07% to 26,834.26.

Market sentiment was supported by signs of progress toward ending the conflict involving Iran, although weakness across artificial intelligence-related stocks kept gains in check.

Healthcare and financials power the Dow

UnitedHealth Group was among the biggest contributors to the Dow's advance after Bank of America upgraded the healthcare giant to Buy. Shares of UnitedHealth rose more than 5%.

Financial stocks also rebounded after suffering losses in the previous session amid renewed concerns over private credit.

JPMorgan Chase gained roughly 4%, while Blackstone advanced after the alternative asset manager capped withdrawals from its flagship private credit fund following an increase in redemption requests.

Other non-technology stocks also attracted buyers. Walmart added around 1%, while Costco and Eli Lilly gained more than 1% and 5%, respectively.

The move reflected what some market participants viewed as an early rotation away from the artificial intelligence trade that has dominated equity markets for much of the year.

Broadcom earnings spark chip sector pullback

The semiconductor sector came under pressure after Broadcom reported fiscal second-quarter revenue that fell short of expectations.

Broadcom shares tumbled sharply, dragging down other AI-linked names that had been among the market's strongest performers this year.

The VanEck Semiconductor ETF declined nearly 2%, while Arm Holdings, Micron Technology, and Qualcomm also lost ground. Marvell Technology managed to post gains despite the broader sector weakness.

Shares of cybersecurity company CrowdStrike Holdings moved lower on Thursday after the company reported higher quarterly operating expenses, weighing on investor sentiment.

Meanwhile, the investor roadshow for SpaceX officially began ahead of its planned June 12 market debut.

The company is seeking to raise $75 billion in what would be one of the largest initial public offerings on record, implying a valuation of approximately $1.75 trillion.

Geopolitics and economic data shape sentiment

Investor confidence was also helped by developments surrounding the conflict in the Middle East.

The US House of Representatives passed a measure on Wednesday that would block President Donald Trump from continuing the war on Iran.

Meanwhile, a US-mediated ceasefire agreement between Israel and Lebanon raised hopes for a broader regional de-escalation, although the proposal was rejected by Hezbollah.

A decline in front-month crude oil futures reflected expectations that tanker traffic through the Strait of Hormuz could eventually normalize.

Economic data released Thursday presented a mixed picture.

Initial jobless claims unexpectedly rose 6.1%, while first-quarter labor costs and productivity were revised lower.

Separately, a report from Challenger, Gray & Christmas showed announced layoffs by US employers increased 11% in May to 97,006, with nearly 40% of those reductions attributed to artificial intelligence.