The Dow Jones climbed to a fresh record high on Wednesday and software stocks surged, but a punishing semiconductor selloff dragged the Nasdaq 100 lower, leaving Wall Street sharply split down the middle as the AI trade fractured.
The S&P 500 gained 0.3% near 7,518, while the Dow Jones Industrial Average advanced about 332 points, or 0.6%, to a record above 52,700.
Within the Magnificent Seven, Meta Platforms Inc. (META) soared 9.9% after announcing plans to build a cloud business to sell its excess AI compute capacity.
In semiconductors, Nvidia Corp. (NVDA) fell 1.4% and Micron Technology Inc. (MU) sank 9.0%.
West Texas Intermediate crude fell 2.0% to $68.12 a barrel, while Brent slid 2.5% to $71.12, with both benchmarks now falling below levels prior to the start of the war in Iran.
Treasury Yields Ease After Hawkish Stretch
The 10-year yield inched lower to 4.47% after testing 4.5% earlier in the session. The 2-year yield slipped about 3 basis points to 4.16%.
The moves followed remarks from Federal Reserve Chair Kevin Warsh, who said at the ECB's Sintra forum that inflation risks have eased in recent weeks while stressing the Fed remains committed to its 2% target.
The softer tone aligned with the ISM manufacturing prices-paid gauge, which tumbled to 73.0 from 82.1, and a cooler-than-expected ISM Manufacturing PMI of 53.3. ADP data showed the private sector added just 98,000 jobs in June, below the 113,000 forecast.
Rate traders still hold a loose consensus for one hike by December.
Gold pushed higher as the softer inflation signals boosted appeal. Spot gold rose 1.9% to $4,085 an ounce and silver jumped 3.1% to $60.30, lifting the SPDR Gold Shares (GLD).
Wednesday's Performance In Major US Indices
According to market data:
- The Vanguard S&P 500 ETF (VOO) gained 0.3%.
- The SPDR Dow Jones Industrial Average ETF Trust (DIA) rose 0.6%.
- The Invesco QQQ Trust (QQQ) slid 1.0%.
- The iShares Russell 2000 ETF (IWM) rallied 0.6%.
Software Feasts While Silicon Starves
The session laid bare a violent rotation inside technology.
The Communication Services Select Sector SPDR Fund (XLC) led all groups, up 2.8% on the back of Meta and Alphabet, while the Financial Select Sector SPDR Fund (XLF) climbed 2.6%. At the other extreme, the Technology Select Sector SPDR Fund (XLK) fell 1.8% and the Utilities Select Sector SPDR Fund (XLU) slid 1.0%, while the Energy Select Sector SPDR Fund (XLE) was little changed as crude retreated.
The split was even starker at the industry level.
The iShares Expanded Tech-Software Sector ETF (IGV) surged 4.2%, the day's best-performing industry group, and the First Trust Dow Jones Internet Index Fund (FDN) rose 2.6%. Yet the VanEck Semiconductor ETF (SMH) cratered 4.5%, the worst group on the tape.
The VanEck Gold Miners ETF (GDX) added 2.0% alongside bullion, while the VanEck Oil Services ETF (OIH) fell 1.6% with crude.
Biggest Losers Swept Up In Chip Carnage
KLA Corp. (KLAC) dropped 10.1% and Semtech Corp. (SMTC) fell 10.7%. Micron, SanDisk Corp. (SNDK), Broadcom Inc. (AVGO) and chip-equipment peer Teradyne Inc. (TER) all fell more than 9%.
CoreWeave Inc. (CRWV) tumbled 12.7% as the neocloud selloff intensified, pressured directly by Meta's plan to sell its own excess AI compute capacity. Corning Inc. (GLW) fell 13.2%.
In consumer names, Nike Inc. (NKE) fell about 3% after flagging a cautious outlook tied to consumer anxiety.
On the upside, crypto-linked stocks led the Russell 1000. Strategy Inc. (MSTR) jumped 12.5% and Coinbase Global Inc. (COIN) gained 12.0% after Cantor said the bitcoin bear market may be entering its final stretch.
Riding the software wave, AppLovin Corp. (APP) climbed 11.0% and Reddit Inc. (RDDT) rose 10.2%.
Wednesday's Russell 1000 Top Gainers
Wednesday's Russell 1000 Top Losers
