U.S. equities split in Thursday morning trade as investors rotated out of chip stocks into healthcare, financials, and communication services. The Dow Jones Industrial Average soared more than 800 points to a 52-week high of 51,502 before paring gains, while the S&P 500 remained flat and the Nasdaq Composite fell nearly 0.7%. The rotation followed Broadcom's decision not to raise AI revenue expectations for fiscal 2026 and 2027, which disappointed investors and triggered a semiconductor sector selloff. Healthcare stocks rallied after BofA upgraded UnitedHealth Group to Buy with a $450 price target, citing improving medical cost trends.
Nine out of 11 sectors in the DJIA index were in the green, with information technology down 2.6% and energy down 0.5%.
UnitedHealth Group Upgraded to Buy by BofA, Healthcare Stocks Rally
UnitedHealth Group Inc. (UNH) shares rose nearly 6% in Thursday's opening trade after BofA analyst Kevin Fischbeck upgraded UNH to Buy from Neutral with a price target of $450, up from $420, according to TheFly. Fischbeck cited improving medical cost trends and supportive near-term data points for his bullish outlook.
Morgan Stanley analysts raised their price target for UNH stock to $453 from $395 while maintaining an Overweight rating. The firm stated that managed care stocks have been trending higher amid signs of easing utilization, while AI-driven gains in both revenue and cost efficiency could eventually boost earnings per share by an average of 45%.
Johnson & Johnson (JNJ) shares were up more than 2%, while Merck & Co. Inc. (MRK) shares surged about 5%.
Broadcom Falls 15% After Declining to Raise AI Revenue Guidance
Broadcom Inc. (AVGO) fell more than 15% after the chipmaker's decision not to raise AI revenue expectations for fiscal 2026 and 2027 disappointed investors.
Shares of Marvell Technology Inc. (MRVL), Micron Technology Inc. (MU), Nvidia Corp. (NVDA), Advanced Micro Devices Inc. (AMD), and Qualcomm Inc. (QCOM) were down between 1% and 7% at the time of writing.
The VanEck Semiconductor ETF (SMH) was down about 3%, while the iShares Semiconductor ETF (SOXX) fell 4%.
WTI Crude Oil Futures Drop 3.48% to $92.68 Per Barrel
Crude oil prices fell Thursday, with the U.S. West Texas Intermediate crude futures maturing in July declining 3.48% to hover around $92.68 per barrel. Brent crude futures expiring in August fell 2.65%, hovering at $95.22 per barrel.
The United States Oil Fund ETF (USO) declined 3%, while the ProShares Ultra Bloomberg Crude Oil ETF (UCO) was down 4% at the time of writing.
At the time of writing, the SPDR S&P 500 ETF (SPY) was down 0.08%, the Invesco QQQ Trust ETF (QQQ) fell 1.07%, and the SPDR Dow Jones Industrial Average ETF Trust (DIA) gained 1.25%. Retail sentiment on Stocktwits regarding the S&P 500 ETF was in the bullish territory.
FAQ
What caused the Dow Jones to rise 800 points on Thursday?
The Dow Jones Industrial Average rose more than 800 points to a 52-week high of 51,502 driven by a rally in healthcare stocks, particularly after BofA upgraded UnitedHealth Group to Buy with a $450 price target. Nine out of 11 sectors in the DJIA were in the green as investors rotated into healthcare, financials, and communication services.
Why did Broadcom stock fall more than 15%?
Broadcom Inc. (AVGO) fell more than 15% after the chipmaker decided not to raise AI revenue expectations for fiscal 2026 and 2027, disappointing investors. This triggered a broader selloff in semiconductor stocks, with the VanEck Semiconductor ETF down 3% and the iShares Semiconductor ETF down 4%.
