The S&P 500 and the Nasdaq were little changed on Wednesday, with declines in heavily weighted technology megacaps limiting gains as investors turned to small-cap and financial stocks after a slew of upbeat bank earnings.
Morgan Stanley MS.Nleapt 7.8% to a record high after it joined peers such as JPMorgan Chase JPM.N in reporting strong profitsfollowing a sharp increase in investment banking revenue.
The Dow regained some lost ground after a selloff in the previous session, lifted by a 3% rebound in the shares of UnitedHealth UNH.N and a 1.9% gain in Goldman Sachs GS.N.
The small-cap Russell 2000 index .RUT leapt 1.5% to a more than two-month high as investors rotated from expensive tech megacaps to less expensive sectors.
“There has been a broadening out in terms of participation… in the small caps versus the large caps,” said Zachary Hill, head of portfolio management at Horizon Investments.
“That’s a positive sign, some of it having to do with interest rates coming down and some relief on the balance sheet side for more highly levered smaller-cap companies.”
Wall Street loses ground as chip, oil stocks plummet
Among lenders, First Horizon FHN.N gained 4% and U.S. Bancorp USB.N rose 5% after reporting third-quarter results. The broader Banks .SPXBK index was up 1% and an index tracking regional banks .KRX rose 1.9%.
Apple AAPL.O lost 1.6% after hitting a record high in the previous session, Microsoft MSFT.O was off 1% and Meta Platforms META.O fell 1.9%.
Chip heavyweight Nvidia NVDA.O, however, bucked the megacap slide, rising 1.7% after slumping nearly 5% in the previous session.
Gains in the so-called Magnificent Seven group of tech stocks have been the primary drivers of Wall Street’s record-breaking run this year. However, with valuations increasingly stretched and a brighter economic outlook, investors have been seeking opportunities elsewhere.
“Valuations for (the largest tech stocks) are somewhat lofty. When you see the daily gyrations in the market, it’s based primarily on how the earnings situation looks for those firms,” said Scott Welch, chief investment officer at Certuity.
Utilities .SPLRCU led sectoral gains and was up 1.2%. The economically sensitive Transport index .DJT jumped 2%, lifted by an 11% leap in United Airlines UAL.O after it forecast better-than-expected fourth-quarter profit and announced a $1.5-billion share buyback program on Tuesday.
The Dow Jones Industrial Average .DJI rose 203.46 points, or 0.48%, to 42,936.19, the S&P 500 .SPX gained 7.32 points, or 0.13%, to 5,822.58 and the Nasdaq Composite .IXIC lost 16.73 points, or 0.09%, to 18,298.86.
More corporate earnings are due through the week, along with key economic data including the retail sales and industrial production figures for September on Thursday.
Bets on a 25-basis-point rate cut at the central bank’s November meeting have risen to 92.8%, according to CME’s FedWatch.
U.S.-listedshares of chip equipment-maker ASML Holding ASML.OASML.AS lost 5.7% after the company cut its 2025 financial forecast, while Intel INTC.Ofell 2% after the Cybersecurity Association of China recommended initiating a review of the chipmaker’s products sold in the country.
Advancing issues outnumbered decliners by a 3.53-to-1 ratio on the NYSE, and by a 2.71-to-1 ratio on the Nasdaq.
The S&P 500 posted 41 new 52-week highs and no new lows, while the Nasdaq Composite recorded 134 new highs and 39 new lows.