The Dow Jones Industrial Average touched a fresh intraday record on Wednesday before giving up most of its gains, while the Nasdaq Composite declined as investors took profits in semiconductor stocks following the sector’s blockbuster first-half rally.
The Dow briefly climbed to an all-time intraday high of 52,742.66 before pulling back, with weakness in AI-related industrial stock Caterpillar weighing on the blue-chip index.
Dow closed down 13 points. The S&P 500 slipped 0.2%, while the Nasdaq Composite lost about 0.7%.
Dow reaches new high as investors rotate out of technology
The session reflected a continued shift in investor positioning after a strong first half of 2026, with capital moving from high-flying technology stocks into more traditional sectors.
Jeff Kilburg, founder and CEO of KKM Financial, said the trend reflects a healthier market rather than weakening investor confidence.
“The ‘Great Rotation’ trade persists into [the third quarter] as the blue boring names of the Dow Jones continue to attract inflows directly from recent profit taking money from tech stocks,” Jeff Kilburg, founder and CEO of KKM Financial, told CNBC. “This is extremely healthy and underscores the broadening breadth of equities for this continued bull market in its fourth year.”
The major indexes entered the second half of the year following strong gains.
During the first six months of 2026, the Dow advanced 8.9%, marking its best first-half performance since 2021. The S&P 500 gained 9.6%, while the Nasdaq climbed 12.8%.
The Russell 2000 surged nearly 22%, its strongest first-half performance since 1991.
Chipmakers retreat after historic rally
Semiconductor stocks led Wednesday’s declines as investors locked in gains following an exceptional rally during the first half of the year.
Micron Technology dropped about 9%, although the stock remained up roughly 250% year to date.
SanDisk fell around 10% after soaring more than 850% during the first half of 2026. Nvidia declined about 1%, while Broadcom lost roughly 2%.
Despite the weakness across chipmakers, gains in several megacap technology companies helped limit broader market losses.
Meta Platforms surged nearly 10% after Bloomberg News reported the company is developing a cloud infrastructure business to sell excess AI computing capacity.
Microsoft climbed roughly 3%, while Apple added about 2%.
Investors monitor Fed, economic data and geopolitical developments
Markets also focused on comments from Federal Reserve Chair Kevin Warsh during the European Central Bank conference in Portugal.
Warsh said recent inflation risks had eased but emphasized that the Federal Reserve remains committed to its 2% inflation target and would not pursue easier monetary policy despite calls from President Donald Trump for lower interest rates.
Traders modestly reduced expectations for future rate hikes following his remarks, although markets still anticipate at least one increase before year-end.
Investors also monitored developments involving the United States and Iran after officials continued indirect technical talks in Qatar concerning the Strait of Hormuz.
US Vice President JD Vance said discussions were progressing and indicated Washington would avoid returning to full-scale combat unless necessary.
Economic data released Wednesday showed US manufacturing activity slowed in June but remained resilient.
Attention now turns to Thursday’s closely watched June nonfarm payrolls report, which could provide further insight into the health of the labor market and the Federal Reserve’s policy outlook ahead of the US market holiday on Friday.
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