The Dow Jones Industrial Average and S&P 500 climbed on Thursday as investors reallocated their focus to cyclical stocks poised to benefit from an improving economy. This rotation came at the expense of technology shares, such as Nvidia, which faced mixed reactions despite strong earnings.
Major Indexes Gain Amid Economic Optimism
The Dow Jones Industrial Average rose 533 points, or 1.2%, while the S&P 500 gained 0.6%. The Nasdaq Composite, with its heavy tech focus, saw a modest 0.1% uptick as investors began to weigh the prospects of a more robust economic recovery.
“This is the week where everyone is rethinking the Trump trade,” said Mark Malek, chief investment officer at Siebert. “People are taking it a little more seriously. It’s not enough to just say ‘we think the sector is going to do well’ — you have to have some answers.”
The Russell 2000 Index, a barometer for small-cap companies, surged 1.8%, reflecting investor optimism about a potential economic boost from President-elect Donald Trump’s policies.
Cyclical Stocks Lead the Charge
Thursday’s biggest winners included industrial and retail giants. Bank stocks like Goldman Sachs, industrial behemoth Caterpillar, and Home Depot all posted gains, benefiting from renewed investor confidence in sectors tied to economic growth.
The rotation into cyclicals signals a shift from speculative tech investments to more stable bets as economic recovery gathers momentum.
Nvidia and AI Stocks: A Volatile Day
Despite reporting better-than-expected earnings and issuing strong guidance, Nvidia’s stock seesawed throughout the day. Shares ultimately rose by 0.7%, but concerns lingered over slowing revenue growth compared to previous quarters and whether the company could sustain its extraordinary performance.
“While Nvidia’s story of huge beats has underscored the dramatic rise in AI growth, investors would be prudent to consider whether Nvidia outpacing estimates to such a degree is sustainable,” said Greg Bassuk, CEO of AXS Investments. He warned of potential volatility as the stock faces a “tug-of-war” between bullish and bearish sentiments.
Other tech stocks weren’t as fortunate. Amazon dropped nearly 3%, Meta Platforms slipped 1%, and Alphabet plunged 6% on mounting antitrust fears. However, there were bright spots in the tech sector: Snowflake soared almost 30% after exceeding Wall Street expectations and raising its fiscal-year revenue guidance. Salesforce also rallied 5%, giving a significant boost to the Dow.
Bitcoin Hits Record High
Amid the market activity, Bitcoin reached a new milestone, crossing $98,000 for the first time late Wednesday. The cryptocurrency is benefiting from investor speculation that a second Donald Trump presidency could introduce favorable regulations for the digital asset market. It was last trading near $96,566, reflecting sustained enthusiasm for the sector.
Thursday’s market activity showcased a decisive shift in investor sentiment. With cyclical stocks gaining traction and the tech sector facing increased scrutiny, the markets are signaling optimism for economic recovery under the potential policies of a new administration. As volatility looms, particularly in the tech and cryptocurrency sectors, investors are recalibrating their strategies to balance opportunity with caution.
