The Dow Jones Industrial Average ended Thursday's session at 51,920.62, gaining 71.72 points or 0.14%, but well off its intraday peak. The index touched a 52-week high of 52,655.66 before sliding in late trading, ultimately closing 735.04 points below that level and just shy of the 52,000 mark. The S&P 500 edged down less than 0.01% to 7,357.52, while the Nasdaq Composite dropped 0.46% to 25,358.60.
Market Divergence: Industrials Surge, Tech Drags
The Dow's modest gain masked a sharp divergence within the index. Caterpillar Inc. (CAT) soared 6.34%, adding $63.04 to close at $1,057.49. Given the price-weighted nature of the Dow, where each $1 move in Caterpillar equates to approximately 6.16 points, the stock contributed roughly 388 points to the index. This surge was fueled by demand related to AI data-center spending, according to MarketWatch. However, Apple Inc. (AAPL) tumbled 6.12% to $275.15, becoming the worst performer in the S&P 500 and dragging on the Dow in the final hours.
AI Chipmakers Rally, But Costs Raise Questions
AI-related semiconductor stocks posted strong gains. Micron Technology Inc. (MU) jumped 15.74% to $1,213.56 after reporting fiscal Q3 revenue of $41.46 billion, a sharp jump from $9.30 billion a year earlier. The company guided Q4 revenue to approximately $50.0 billion. SanDisk Corp. (SNDK) surged 21.97%, and Applied Materials Inc. (AMAT) rose 13.42%. Despite the rally, some analysts cautioned that the AI spending boom is a zero-sum game. Carol Schleif, chief investment officer at BMO Family Office, told Reuters, “For Micron’s profits, it’s coming out of somebody else’s hide.”
Qualcomm Sets Ambitious Data-Center Targets
Qualcomm Inc. (QCOM) late Wednesday outlined plans to generate $15 billion in data-center sales by 2029, with $40 billion in chip revenue outside of smartphones by that year. CFO Akash Palkhiwala stated, “We will be truly diversified.” Reports from Reuters indicated that Microsoft Corp. (MSFT) and Meta Platforms Inc. (META) will use Qualcomm’s new AI chips. Qualcomm’s data-center chief Tony Pialis noted hyperscale customers were “pulling us in,” though margin concerns for chip buyers remain unaddressed.
Macroeconomic Headwinds
The market also faced macro pressure. The Commerce Department reported that May PCE prices rose 4.1% year over year, with core PCE up 3.4%. Real GDP grew at a 2.1% annual rate in the first quarter, according to the BEA’s third estimate. These figures underscore persistent inflation and moderate growth, adding to investor uncertainty.
Market Outlook
The Dow’s inability to hold above 52,000, coupled with the 735-point swing from its high, suggests a cautious tone among traders. While industrials like Caterpillar benefit from AI infrastructure spending, the broader tech selloff, led by Apple, highlights the fragility of the current rally. Investors will watch for further earnings reports and economic data to gauge the sustainability of the AI-driven market.
