Traders work on the floor of the New York Stock Exchange on July 24, 2024.
Spencer Platt | Getty Images
Stocks rose on Thursday as Wall Street attempted to recover from the worst session since 2022 for the S&P 500 and Nasdaq Composite.
The Dow Jones Industrial Average outperformed, surging 500 points, or 1.3%, as IBM rallied more than 5% for its best day since January. The S&P 500 rose 1%, while the Nasdaq Composite added 0.9%. The Russell 2000 gained 2% as investors continued their rotation into small caps.
Investors continued to dump some of 2024’s winning tech names for a second day. Advanced Micro Devices lost 2%, while megacap stocks Meta Platforms, Microsoft and Alphabet fell about 1% each.
“There’s a changing of the guard happening on Wall Street. The AI stocks that led on the way up are now leading on the way down,” said Adam Sarhan, CEO of 50 Park Investments, adding that these movements are not uncommon during a bull market “great mini rotation.”
“During bull markets, you see one sector lead, then it pauses, corrects and passes the baton,” he said. “Think of it like a relay race over to another sector.”
Investors also assessed a second-quarter GDP report that showed the economy grow 2.8%, much more than expected. Economists surveyed by Dow Jones had anticipated growth of 2.1%.
Wall Street is coming off a losing session, with the S&P 500 and Nasdaq suffering their biggest one-day pullbacks in more than a year. Those losses were spurred by disappointing tech earnings reports.
Investors have come to view the recent declines as a sign of an overdue correction in an overbought market, which is now seeing a rotation away from megacap tech into small-cap stocks and more cyclical areas.
Ford Motor shares tumbled 16% and headed for their worst day since 2009 after second-quarter earnings came in much lower than analysts expected. Chipotle slipped 3% despite topping earnings and revenue expectations, while ServiceNow popped 13% on stronger-than-expected earnings and headed for its best day since 2016.
