Tech Market Shift
Dow Rises as Nasdaq Tech Stocks Slide on Broadcom AI Outlook Miss
U.S. markets were sharply split on Thursday as the Dow jumped while the S&P 500 and Nasdaq slipped, largely because semiconductor shares sold off hard. Broadcom led the decline after its AI chip outlook failed to meet investor expectations, pulling down major chip ETFs and dragging other names lower, while cybersecurity firm CrowdStrike also fell on softer guidance. Investors rotated out of tech into sectors such as healthcare and financials, lifting stocks like UnitedHealth and supporting the Dow even as concerns grew about the sustainability of the AI-led rally. Market sentiment also weakened after initial jobless claims rose to 225,000 for the week ended May 30, the highest level since early February, alongside signs of softer macro conditions. Geopolitical developments tied to U.S.-Iran tensions—along with President Trump’s stated conditions for a potential ceasefire—and a retreat in crude oil prices added to the volatility. Separately, SpaceX confirmed plans for a record $75 billion IPO via a new filing.
Key Points
Broadcom’s drop reflected not just an overall “AI outlook” miss, but its decision “not to raise AI revenue expectations for fiscal 2026 and 2027,” which disappointed investors and contributed to the selloff across semiconductors.
While the Nasdaq had risen for about two weeks, analysts warned the advance was becoming more fragile as “the number of stocks actually driving it was narrowing,” a dynamic that can leave the index “exposed” to sudden reversals.
Healthcare gains were boosted by specific bullish calls on UnitedHealth: BofA analyst Kevin Fischbeck upgraded UNH to “Buy” from “Neutral,” lifting the price target to $450 from $420, citing improving medical cost trends and supportive near-term data.
Beyond jobless claims, other macro data added caution: first-quarter productivity rose 0.3%, below the 0.5% forecast, according to reporting in the same coverage of Thursday’s market moves.
Truist Wealth strategist Keith Lerner told CNBC that investors were likely due for a pullback in an extended run: “I just think we’re due for a rest,” as he described the market’s rotation and the limits of the AI-led momentum.
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