By Ryan Dezember
Shares of manufacturer 3M had their best day on record Friday, leading the Dow to a 654-point gain as investors continued to spread their bets beyond the big tech firms that powered stock indexes to new heights this summer.
Every industry sector in the S&P 500 ended Friday higher in a broad rebound from what had been a rocky week on Wall Street, including a midweek tech selloff.
The Dow Jones Industrial Average rose 1.6% to end the week up 0.7%. The S&P 500 increased 1.1% but finished the week 0.8% lower. The Nasdaq Composite also gained but logged a weekly decline of 2.1% after suffering its biggest daily drop since 2022 on Wednesday.
The Russell 2000 continued its resurgence, adding 1.7% Friday. The index of smaller companies has risen for three straight weeks.
Treasury yields declined. The yield on benchmark 10-year notes ended Friday at 4.199%, down from 4.255% Thursday. Yields fall as prices rise.
Dec Mullarkey, managing director of investment strategy and asset allocation at SLC Management, said the rally's spread from a few giant technology stocks to old-economy businesses such as banks, landlords, utilities and manufacturers shows investors are hedging their bets on the artificial-intelligence boom.
"There is a broadening out of growth beyond big tech to other sectors that have been fairly beaten up," he said. "Investors are hunting around for value."
Though shares of the so-called Magnificent Seven tech stocks have declined lately -- Friday's gains notwithstanding -- Vince Lorusso, chief executive of fund manager Clough Capital Partners, said that it is too early to throw in the towel on the big tech stocks.
"The amount of free cash flow that these companies are generating is staggering," Lorusso said. "We're not overly concerned about whether these companies are exhibiting bubble characteristics."
Though Friday's rally was broad, trading was dominated by sharp moves related to corporate earnings reports and updated sales outlooks.
Shares of 3M surged 23% after the materials giant beat analysts' expectations for second-quarter sales and earnings and the company lifted the floor for its full-year outlook.
Flooring maker Mohawk Industries jumped 19% after it lifted its profit outlook. Cable television operator Charter Communications, pharmaceutical firm Bristol-Myers Squibb and freight railroad Norfolk Southern each gained more than 10% in response to their own quarterly results.
DexCom was a big drag on the S&P 500, plunging 41% after the maker of monitoring-devices for diabetes patients cut its 2024 sales outlook.
DexCom's CEO told investors that there have been a lot fewer new diabetes patients than the company expected. Investors have been on edge over the impact of weight-loss drugs known as GLP-1s, including Ozempic, on stocks ranging from fast-food restaurants to medical-device makers.
Commodity prices continued to slide. U.S. benchmark oil futures lost $1.12 a barrel, capping a third straight weekly decline and closing at $77.16.
August natural-gas futures traded as low as $1.997 per million British thermal units. Aside from the 2020 Covid-lockdown crash across markets, natural gas hasn't been so cheap during the heat of the summer since the 1990s.
Wheat futures fell 2.65% in Chicago to close at $5.235 a bushel, the lowest price since 2020. Corn and soybean futures also shed more than 2% Friday to trade around multiyear lows. Bumper crops are expected across the country.
Overseas, South Korea's Kospi Composite ended Friday up 0.8% while London's FTSE 100 and the CAC in Paris each gained 1.2%.
Japan's Nikkei 225 shed 0.5%. Taiwan's benchmark Taiex dropped 3.3% after being closed for two days due to a typhoon.
Write to Ryan Dezember at ryan.dezember@wsj.com
(END) Dow Jones Newswires
July 26, 2024 16:50 ET (20:50 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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