Review & Preview: The Dow Shines

About-Face. The Dow Jones Industrial Average was the star of a broad stock market rally that came with a few notable exceptions.

The blue-chip index gained 559 points, or 1.2%, to mark its 16th closing high of the year. The S&P 500 finished up 0.2%. The Nasdaq Composite fell 0.3%.

Only four stocks in the Dow closed lower: Nvidia, Cisco Systems, Caterpillar, and JPMorgan Chase. For the S&P 500, a majority of stocks finished the day higher, but tech and AI stocks were hit hard. More on that below.

Among top exchange-traded funds, those focused on value, low volatility, and dividend funds had a strong day. Momentum, risk and growth were the losers.

“Today was one of the biggest rotations out of winners and into laggards we have seen in months,” writes Mizuho’s Daniel O’Regan.

It wouldn’t be the worst thing if this year’s laggards rode an end-of-year wave to play catch up with large tech stocks. It’s better, after all, for market participants if they meet on the way up, not because the tech trade falls apart

O’Regan titled his Tuesday evening note, “Every Dog Has His Day.”

We’ll see if it’s indeed just a day or the start of a bigger rotation in sessions to come.

Company

Last

Chg

Chg%

Dow Jones Industrial Average

48,274.70

346.74

0.72%

S&P 500 Index

6,844.95

-1.66

-0.02%

NASDAQ Composite Index

23,358.98

-109.32

-0.47%

Market Data as of

The Hot Stock: Viatris +10.1%
The Biggest Loser: AppLovin -8.7%

Best Sector: Healthcare +2.3%
Worst Sector: Technology -0.9%

Created with Highcharts 9.0.1Tuesday, Nov. 11Index performanceSource: FactSetAs of Nov. 12, 4 p.m. ET

Created with Highcharts 9.0.1Nov. 12-1.00-0.75-0.50-0.2500.250.500.751.001.25%Dow industrialsS&P 500Nasdaq Composite

An AI Temperature Check

AI stocks have had a bumpy ride in recent days. After a big rally on Monday, they were the major laggards on Tuesday.

Some on Wall Street have begun expressing concerns about valuations. A wave of AI stocks that fell despite strong earnings hasn’t helped the matter.

Tuesday’s slide followed results from CoreWeave. Shares fell 16% even though the “neocloud” firm reported a narrower-than-expected adjusted loss. The company did say a third-party data center developer was behind schedule due to supply chain pressures, my Barron’s colleagues Tae Kim and Adam Clark report. They write:

In an interview with Barron’s after the earnings call, [CEO Michael] Intrator said most of the delay in data center capex spending would be over by the first quarter of next year. The executive said overall demand for AI capacity is higher than it was three months ago.

He reiterated there are extreme pressures on the data center supply chain to meet the rising demand from “pouring concrete” to getting the necessary electric transformers plugged in. “Building the power shell [of the data center] is the most challenging part of delivering infrastructure in the short term,” he said. Intrator doesn’t believe the availability of power will be an issue for the next few years, but it may become a problem later on.

It wasn’t just CoreWeave shares. The iShares Semiconductor ETF was down 2.3%. Nvidia fell nearly 3% after SoftBank Group disclosed it exited its $5.83 billion stake in October, though that’s no retreat from AI: SoftBank is betting big on OpenAI.

AI stocks have often seen furious rallies on news of an OpenAI partnership or an investment in nuclear power. But frantic trading around headlines works in both directions.

Advanced Micro Devices on Tuesday exemplified how tough it can be to cut through the noise and dig into the actual numbers. Shares fell 2.7% with the broader AI slide even though CEO Lisa Su was upbeat at the firm’s financial analyst day in New York. Tae writes:

On Tuesday, the executive offered a new revenue growth outlook above Wall Street’s expectations. Su said the company now expects to grow its revenue at more than 35% a year over the next three to five years, starting with a revenue baseline of $34 billion for 2025.

The current Wall Street consensus for AMD 2025 revenue is $33.8 billion with expected revenue growth of 30% for 2026, 34% for 2027, and 23% for 2028.

“We expect to really inflect in overall revenue growth over the next three to five years,” she said at AMD’s Financial Analyst Day in New York City.

Things looked a lot better after the close when Chief Financial Officer Jean Hu noted the firm expects operating margin to rise from 24% this year to more than 35% over the next three to five years, Tae writes. Hu said that will result in a “clear path” to annual earnings per share of more than $20. Analysts forecast 2028 earnings of $10.18 a share, Tae notes.

The stock was back up 4.1% in after-hours trading.

The Calendar

Cisco Systems, Flutter Entertainment, Tencent Music Entertainment, Circle Internet Group, On Holding, and GlobalFoundries report quarterly results tomorrow.

What We’re Reading Today

• The Fed Might Not Get Key Data for the December Meeting—Even if the Shutdown Ends This Week
• Tariff Rebate Checks Are a $600 Billion Answer to Trump’s Political Problems
• Charles Schwab’s CEO Is Worried About Prediction Markets. What He Told Thousands of Financial Advisors.
• Rate Cuts Aren’t Helping Poorer Families. It’s a Bad Sign for Consumer Spending.
• Thanksgiving Is a Battleground for Retailers. Target Just Cut Prices.

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