The Dow Jones Industrial Average rose on Tuesday, boosted by strong earnings, lower oil prices and a shift from semiconductors to other parts of the market.
The Dow rose 537.24 points, or 1.03%, to 52,747.32. The index of blue-chip companies recorded its third consecutive day of gains. Sherwin-Williams rose 8% after better-than-expected second-quarter results led the index’s gains. Beverage giant Coca-Cola rose 5% after improving operating and profit results, while raising its annual outlook. The S&P 500 added 0.21% to end at 7,428.78.
The Nasdaq Composite fell 0.22% to close at 24,876.91. Chips lagged, with the VanEck Semiconductor ETF (SMH) down more than 3% for a fourth straight day, while Micron and AMD fell more than 8%.
Falling oil prices provided some support to the market, while Iran discussed the Strait of Hormuz with Saudi Arabia and Oman. West Texas Intermediate crude futures fell about 4% to settle at $79.26 a barrel. International Brent crude fell 4.8% to end at $84.09.
The market’s moves reflected a broader rotation that has been taking place in the market in recent weeks in which so-called old-economy sectors are getting a boost, while high-flying tech names are taking a hit, SEEbiz reports.
The Technology Select Sector (XLK) SPDR fund hit its lowest level since May 7. At the same time, the State Street Health Care Select Sector SPDR ETF ( XLV ) and the Financials ETF ( XLF ) rose to record highs, led by gains in insurance stocks.
“It was a really broad rotation,” Ross Mayfield, investment strategist at Baird, told CNBC. “This momentum is a story that has been unfolding for six to eight weeks and has a lot more to do with the technical aspects of the market than any fundamental changes.”
However, that rotation into more cyclical and occasionally sensitive sectors such as consumer discretionary products will depend on whether oil prices and interest rates remain around current levels, he said.
“It’s hard to make the full case that the consumer discretionary business or the financials or the industrials sector will continue to capture supply if rates rise along the curve and oil climbs toward $100 a barrel,” Mayfield said.
