The Nasdaq rose 1.3% on Tuesday, led by gains in Nvidia (NVDA.O) and other big tech names. Meanwhile, the Dow Jones Industrial Average slipped as retailers adjusted their positions and investors awaited key inflation data later in the week.
Nvidia, a maker of artificial intelligence chips, rose 6.8% after three days of losses. The broader chip sector also performed well, with the Philadelphia Semiconductor (.SOX) Index up 1.8%.
Chips played a key role in the S&P 500 tech index's (.SPLRCT) recovery after three straight days of declines. Alphabet Inc. (GOOGL.O) rose 2.7%, leading the way in the Communications Services Index (.SPLRCL).
The rest of the S&P 500's 11 major sectors were significantly weaker than the previous day, with energy (.SPNY) and utilities (.SPLRCU) leading the gains.
"The rebound in tech stocks was a key driver of the market on Tuesday," said Emily Roland, co-chief investment strategist at John Hancock Investment Management. She added that after days of weakness, investors who bought shares of these companies today were looking for a good time to enter the market.
A Conference Board survey added to the mega-cap bias by showing U.S. consumer confidence fell in June amid concerns about the economic outlook. The index fell to 100.4 from a revised 101.3 in May.
"With the potential for economic slowdown that we're seeing signs of, it's usually a good thing for high-quality stocks that are less susceptible to economic volatility," Emily Roland said.
The Dow Jones Industrial Average (.DJI) fell 299.05 points, or 0.76%, to 39,112.16. The S&P 500 (.SPX) rose 21.43 points, or 0.39%, to 5,469.30. The Nasdaq Composite (.IXIC) rose 220.84 points, or 1.26%, to 17,717.65.
The Dow retreated from a one-month high hit on Monday, with Home Depot (HD.N) shares posting the biggest percentage decline, falling 3.6%.
Walmart (WMT.N) shares fell 2.2%, raising concerns among investors after the company's chief financial officer called the second quarter "the most challenging yet" at the NYSE 2024 European Investor Conference in London.
After three straight days of gains, the Dow Jones Transportation Average (.DJT) ended down 0.8% after falling 1.6% earlier in the day. Freight railroad Norfolk Southern (NSC.N) was the second-biggest decliner after an analyst cut his price target and the National Transportation Safety Board reviewed last year's crash and recommended improved safety measures.
Despite falling 0.05% in the regular session, FedEx (FDX.N) shares rose 15% in after-hours trading after the company provided 2025 profit guidance that beat analysts' expectations. FedEx said planned cost cuts will boost profits despite continued weakness in its package delivery business.
Investors are eyeing Friday's release of the personal consumption expenditures (PCE) price index, the Fed's preferred inflation gauge.
Spirit AeroSystems (SPR.N) shares fell 3.96% to $31.76 after media reports that Boeing (BA.N) has offered to buy the aircraft fuselage maker in an all-stock deal valuing the key supplier at about $35 a share. Boeing shares also fell 2.2%.
Cruise operator Carnival Corp (CCL.N) shares rose 8.7% after raising its full-year profit forecast again.
The NYSE posted 122 new highs and 87 new lows, with declining issues outnumbering advancing ones by a 1.62-to-1 ratio.
The S&P 500 posted 20 new 52-week highs and four new lows, while the Nasdaq Composite posted 45 new highs and 178 new lows.
A total of 10.01 billion shares were traded on U.S. exchanges, compared with an average of 11.90 billion over the past 20 sessions.
Investors are preparing for the annual update of the FTSE Russell benchmark indices on Friday, with the wild rally in artificial intelligence-related stocks over the past year expected to have a significant impact on their final shape.
The Russell index's rebuild, an event that typically leads to one of the busiest trading days of the year, will become official after the close of trading on Friday, completing the multi-stage process of annual FTSE Russell index updates.
This annual update forces fund managers to adjust their portfolios to the new weightings and components.
The update covers a number of Russell indices, including the Russell 1000 Large-Cap Index (.RUI) and the Russell 2000 Small-Cap Index (.RUT), which together form the Russell 3000 Index (.RUA). There are also style indices, such as the Russell 1000 Growth Index (.RLG) and the Russell 2000 Value Index (.RUJ).
After last year's reorganization, artificial intelligence-related stocks such as Nvidia (NVDA.O) and Super Micro Computer (SMCI.O), which have been on a tear, are expected to make a significant impact on the Russell growth and value indices.
The annual index updates are known in advance, creating additional demand to buy and sell stocks. Investors can use this additional liquidity as an opportunity to take advantage of price swings that may occur.
In June 2023, U.S. equities on the New York Stock Exchange and Nasdaq were valued at $72.7 billion and $61.7 billion, respectively, in the final moments of Friday trading, according to FTSE Russell.
With a focus on large-cap stocks like Nvidia, the typical large-cap equity manager is short 16.7% of its weighting in the top 10 stocks this year, UBS senior U.S. equity strategist Patrick Palfrey estimated in a report late last month.
