: Investors rotate out of tech as health care hits a record; Dow gains 1%
The equal-weight S&P 500 fund beat the standard S&P fund as health care, value and small-cap shares rose. Technology was the only sector fund to fall.
Key takeaways
Investors moved money out of technology stocks and into health care, value stocks and smaller companies on Tuesday, Oct. 20. The Dow Jones Industrial Average rose 530 points, or 1%, to 52,496. The S&P 500 gained 0.3% to 7,713, and the Nasdaq Composite slipped 6 points to 26,425.
Jim Baird, chief investment officer at Plante Moran Financial Advisors, said investors remain skeptical that AI spenders can profit from their investments and are making “a bit of a rotation into other areas of the market.” The S&P 500 value index rose 0.9% while its growth index fell 0.2%. Advances stocks outnumbered declines about 2 to 1 on both the NYSE and the Nasdaq.
Tuesday's market leaders include Amgen, which rose $14, or 3.3%, to $438.94, and UnitedHealth, which rose $12.38, or 3.0%, to $419.26. Travelers, a financial services company, rose $10.28, or 2.7%, to $395.73, and 3M, an industrial company, rose $9.36, or 5.8%, to $171.37.
3M said Tuesday it had raised 2026 adjusted-earnings guidance to $9.10 to $9.15 a share and expanded an agreement to supply Amazon with data-center products.
Those four were the Dow's biggest lifts, and Alphabet, Apple, Microsoft and Boeing were the biggest drags. Apple fell $3.44, or 1.0%. Alphabet fell 1.1%, Microsoft fell 0.3% and Boeing fell 0.5%. The State Street SPDR Dow Jones Industrial Average ETF Trust, DIA, rose 1.1%, to $524.43, against the index's 1.0% gain.
Health care led the sector board
The State Street Health Care Select Sector SPDR ETF, XLV, rose 2.4%, to $179.83, after trading at $180.06, a 52-week high. Reuters reported Tuesday that the S&P 500 health care sector reached an all-time high, led by large drugmakers, and tied the broader advance to that rally and to softer oil.
Eli Lilly rose 3.5%, to $1,283.66, after touching $1,311.75, a 52-week high. Lilly is 15.6% of XLV, and it is not in the Dow. Johnson & Johnson rose 2.2%. The State Street SPDR S&P Biotech ETF, XBI, rose 3.6%, to $153.24.
Ten of 11 SPDR sector funds closed higher. The State Street Technology Select Sector SPDR ETF, XLK, fell 0.3%.
Health care led; technology was the only decline
The average stock beat the index
On Monday the Invesco QQQ Trust, Series 1, QQQ, rose 1.2%, and the Invesco S&P 500 Equal Weight ETF, RSP, fell 0.3%.
On Tuesday RSP, which gives every S&P 500 company the same weight, rose 1.2%, to $215.86. The State Street SPDR S&P 500 ETF, SPY, which weights companies by market value, rose 0.4%, to $769.32. The equal-weight fund led by 0.8 percentage points.
QQQ fell 0.1%, to $717.63, and is down 3.5% over the past five sessions.
QQQ is down 3.5% over five sessions
- RSP · 101.2
- SPY · 98.85
- QQQ · 96.51
Smaller companies rose as well. BlackRock's iShares Russell 2000 ETF, IWM, rose 1.7%, to $275.82, and the Russell 2000 rose 1.7%, to 2,774.
SPY traded at 0.78 times its 20-session median volume, among its lightest in those 20 sessions.
Builders rose with yields, not with the data
Pending home sales fell 7.3% in September from August and 11.3% from a year earlier, with declines in all four regions, the National Association of Realtors said Tuesday.
"Market conditions weakened in September due to fast-rising mortgage rates," said Lawrence Yun, the association's chief economist.
The Census Bureau and the Department of Housing and Urban Development said September housing starts ran at a 1,221,000 annual rate. CME Group's consensus was 1,305,000. The Census Bureau's margin of error on the 5.2% decline from August was 11.8 percentage points, a range that includes no decline at all.
Single-family building permits fell 4.0%, to an 845,000 annual rate.
On Monday the National Association of Home Builders said its confidence index fell to 29, the lowest reading since June 2012. Chief economist Robert Dietz said higher mortgage rates, elevated construction costs and weaker consumer confidence were keeping buyers on the sidelines.
The iShares U.S. Home Construction ETF, ITB, rose 3.2%, to $87.63. The State Street SPDR S&P Homebuilders ETF, XHB, rose 2.2%, to $96.22.
Mortgage rates follow long-term Treasury yields. The 10-year yield fell three basis points, to 5.12%, and the 30-year fell six basis points, to 5.42%. The rise in the funds lines up with that drop, not with the housing reports.
After the close, Netflix reported third-quarter earnings of 87 cents a share, above the 82 cents analysts polled by LSEG had expected, CNBC reported. Netflix said in its shareholder letter that revenue grew 12% from a year earlier, to $12.9 billion, in line with its forecast, and that full-year revenue would come in 0.2% below the midpoint of its prior full-year forecast. Reuters reported a weaker fourth-quarter forecast.
The shares had already fallen 1.7% in the regular session, to $68.66. In after-hours trading, the bid-ask midpoint was $65.06 at 4:36 p.m. ET, down 5.2% from that close.
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