The Dow Jones Industrial Average closed at a record high for a second consecutive session on Tuesday as investors rotated away from technology stocks and into economically sensitive sectors, while falling oil prices boosted optimism about the broader US economy.
The blue-chip index gained 345.54 points, or 0.67%, to finish at 52,016.57.
In contrast, the S&P 500 fell 0.55% to 7,512.44, while the Nasdaq Composite declined 1.15% to 26,382.81 as investors took profits in technology shares following a strong rally earlier in the week.
The market’s sector rotation came after a sharp advance on Monday that was driven by optimism surrounding a potential agreement between the United States and Iran aimed at ending months of conflict in the Middle East.
Tech stocks retreat after recent rally
Technology shares led the market lower as investors stepped back from some of the sector’s biggest winners.
Semiconductor stocks were among the hardest hit during the session.
Advanced Micro Devices fell more than 5%, while Broadcom and Micron Technology each declined more than 3%.
Nvidia also lost more than 1%.
According to market strategists, the pullback reflected a combination of profit-taking and investor caution ahead of the Federal Reserve’s policy announcement scheduled for Wednesday.
Despite the broader weakness in technology, SpaceX remained a notable exception.
Shares of the recently listed company rallied during the session, extending gains from its post-IPO surge.
For part of the trading day, SpaceX’s market value exceeded that of Amazon and briefly surpassed Microsoft’s valuation before giving back some gains.
Falling oil prices support cyclical sectors
Investors shifted toward financial and industrial stocks as oil prices continued to decline following developments surrounding the proposed US-Iran agreement.
Brent crude futures fell roughly 5%, dropping below $80 per barrel for the first time since March.
US West Texas Intermediate crude declined about 5% to around $75 per barrel.
The decline in energy prices followed comments from President Donald Trump regarding a deal with Iran and the expected reopening of the Strait of Hormuz.
The agreement is expected to extend a ceasefire announced earlier this year and allow Iranian oil exports to resume under specific conditions.
Lower oil prices helped boost shares of companies viewed as beneficiaries of stronger economic activity.
Caterpillar gained more than 2%, while JPMorgan Chase rose more than 3%, leading advances among industrial and financial stocks.
Investors await Federal Reserve decision
Attention is now turning to the Federal Reserve’s policy decision on Wednesday, the first under new Chair Kevin Warsh.
Markets widely expect the central bank to keep interest rates unchanged within the current range of 3.50% to 3.75%.
However, investors are expected to closely scrutinize Warsh’s comments on inflation, employment, and the economic outlook.
The recent decline in oil prices has eased some concerns about inflation, though traders continue to see a roughly 42% probability of a quarter-point rate increase by December, according to CME Group’s FedWatch tool.
Elsewhere in corporate news, Olin shares declined after the chemical producer agreed to acquire Huntsman in an all-stock transaction valued at $2.43 billion.
Huntsman shares also fell as investors reacted to the terms of the offer.
Yum Brands advanced after announcing plans to sell its Pizza Hut business for $2.7 billion as the company seeks to navigate a challenging consumer spending environment.
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