NEWS

US stock indices declined on Wall Street on Friday, December 12, as investors continued to move away from technology stocks and into value sectors.

The S&P 500 fell 1%, and the Nasdaq Composite dropped 1.6%. The Dow Jones Industrial Average slipped 214 points, or 0.4%, after hitting a record high earlier in the session. The Russell 2000 also fell 1.2%, but also reached a record high during the trading day.

Shares of chipmaker Broadcom fell 9% in trading, despite the company beating fourth-quarter expectations and offering strong guidance for the current quarter, indicating that sales of artificial intelligence chips would double. In contrast, shares of Lululemon jumped 10% after the company announced the resignation of its CEO at the end of January, following a weak performance last year. This move paved the way for another day of range-bound trading, as investors on Thursday shifted their focus to cyclical stocks, which are more sensitive to the economic climate, while taking profits on growth stocks linked to the artificial intelligence sector. This comes after the U.S. Federal Reserve cut interest rates on Wednesday for the third time this year.

The Dow Jones Industrial Average and the S&P 500, which comprise 30 stocks, closed at record highs in the previous session, while the Nasdaq Composite finished 0.3% lower, weighed down by declines in shares of leading technology companies such as Alphabet and Nvidia.

The Dow Jones Industrial Average rose 646 points, or 1.3%, boosted by a 6% jump in Visa shares and strong gains in Nike and UnitedHealth Group.

Chris Zaccarelli, chief investment officer at Northlight Asset Management, commented, "The Dow Jones performed exceptionally well today, and if this trend continues, it could be the start of a wider trading range."

For his part, Jed Ellerbrook, portfolio manager at Argent Capital Management, said: “Today is a day when value stocks are outperforming growth stocks. Investors are certainly apprehensive about AI; they’re not completely pessimistic, but in my opinion, they’re cautious, nervous, and hesitant.”

Today’s losses put the S&P 500 and Nasdaq on track for a losing week, with the former down 0.8% and the latter nearly 2%. In contrast, the Dow Jones Industrial Average, which tracks 30 stocks, is still on track for gains, up about 1% for the week. Meanwhile, small-cap companies outperformed their larger counterparts, with the Russell 2000 index rising more than 1% this week after hitting new record highs and closing at its highest level on Thursday.