US stocks: Dow gains 1.05% as healthcare leads rotation

The Dow Jones Industrial Average rose 1.05% to 52,513.98 on Tuesday, October 20, as healthcare shares helped drive a shift towards value-oriented stocks. The S&P 500 gained 0.31% to 7,714.52, but the Nasdaq slipped 0.03% to 26,421.84. Economic Times Markets, citing Reuters, reported that technology shares lost momentum after rebounding in the previous session.

Healthcare was the strongest S&P 500 sector, with its sector index reaching a record high. Eli Lilly supported the broader benchmark, while Dow constituents UnitedHealth, Merck & Co, Johnson & Johnson and Amgen advanced. Moderna reached its highest level since 2022.

Investors look beyond technology

Real estate and utilities also outperformed, and small-cap stocks gained. Jim Baird, chief investment officer at Plante Moran Financial Advisors, attributed the rotation partly to investor doubts about whether companies could turn their artificial-intelligence investments into earnings. Healthcare was benefiting as investors sought opportunities outside technology, he said.

Technology stocks were broadly flat following their recovery from the previous week's selloff, with AI spending commitments and financing costs continuing to weigh on sentiment. Weakness in Meta, Netflix and Alphabet pulled communication services lower. Energy shares also lagged as oil prices retreated after reaching a five-month high.

Company outlooks drive individual moves

General Motors declined after flagging pressure from rising commodity costs and softer truck sales. By contrast, 3M gained after expanding its data-centre partnership with Amazon and lifting its full-year profit forecast.

Equifax rallied after third-quarter profit exceeded analysts' expectations. Hasbro also advanced after raising its full-year revenue and digital-gaming forecasts.