Dow's banner day points to investor pivot beyond S&P 500's top winners

By Vivien Lou Chen

The Dow Jones Industrial Average closed at a fresh record high Tuesday as investors piled into stocks beyond the hot AI plays

The Dow Jones Industrial Average finished on Tuesday with its 16th record close of the year.

The Dow Jones Industrial Average ended Tuesday's session at an all-time high, as enthusiasm over the artificial-intelligence trade faded and investors pivoted into sectors that represent broader areas of the U.S. economy.

Drugmaker Merck & Co. (MRK), biopharmaceutical company Amgen Inc. (AMGN) and athletic-apparel giant Nike Inc. (NKE) led the Dow higher. The blue-chip stock index DJIA rose 559.33 points, or almost 1.2%, to end at 47,927.96, while the tech-heavy Nasdaq Composite COMP slipped 58.87 points, or 0.3%, to 23,468.30. Meanwhile, the large-cap benchmark S&P 500 SPX eked out a gain of 14.18 points, or 0.2%, helped by a rotation by investors into sectors such as healthcare, energy and consumer staples.

"The Dow is diverging from the Nasdaq and S&P 500 because it does not have as much exposure to tech in the way those two other indexes do," said Sam Stovall, chief investment strategist for CFRA Research.

Meanwhile, within the S&P 500, "investors are basically rotating out of growth and into value, primarily because of concerns over valuations for the growth sector, as well as the attractiveness of the unloved value side of the equation," he said via phone interview Tuesday.

Stovall added that there's been a rotation out of "pure growth" stocks and into "pure value" stocks going on since August, and this rotation is now gathering steam. He defines "pure growth" and "pure value" as being the 100 stocks on each side of the extremes within the S&P 500's growth XX:SP500PG and S&P 500 value XX:SP500PV buckets.

"This is telling me investors still want to stick with stocks, and they are simply hopping from one lily pad to the next, because the market in general was driven by communication services, consumer discretionary, industrials and technology names - all of which exhibited very steep premiums and valuations versus their long-term averages," the strategist said.

Stocks opened mixed on Tuesday, as traders weighed an anticipated end to the longest U.S. government shutdown in history against a new report that reflected average weekly losses in private-sector hiring during October. Private-sector employers shed an average of 11,250 jobs a week in the four weeks that ended Oct. 25, according to the report from payroll-processing firm ADP Inc. (ADP)

Separately, late Monday, the U.S. Senate approved a funding bill that could end the shutdown in a matter of days. The bill now heads to the House of Representatives for a final vote.

Read: Here's when to expect shutdown-delayed jobs and inflation reports once the government reopens

Since much of October, "the market has assumed that the shutdown would end and not leave a lasting economic impact," said Ross Mayfield, a Kentucky-based investment strategist at Baird Private Wealth Management.

While private labor-market data has been pretty soft, there is "a bit of the market that needs that to happen to keep the Fed on a path of easing," Mayfield said via phone. "So as long as it is not recessionary, the market is not going to be all that upset about soft labor-market data, because it will be a catalyst to the Fed cutting interest rates by more."

See: When will the House vote to reopen the government? Here's what to know.

-Vivien Lou Chen

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11-11-25 1628ET