Key points:

  • The Dow Jones index set a new all-time high.
  • Strong financial performance from small-cap companies and the financial sector.
  • Mixed results for major tech companies.

At the close of trading on Wednesday, the Dow Jones Industrial Average set a new all-time high, finishing the session on an upward trend. Two other key Wall Street indices also showed positive performance, despite a decline in the stock prices of major tech companies. The market rally was supported by small-cap companies and the financial sector, both of which posted strong financial results.

This marks the third time in the last four trading sessions that the Dow Jones has reached a record high, surpassing 43,000 points and fully recovering from the previous trading day’s losses.

The S&P 500 index also came close to setting a new closing record but ultimately fell just short, adding 27.21 points or 0.47%, and closing at 5,842.47 points. The Nasdaq Composite also showed positive momentum, increasing by 51.49 points or 0.28%, to 18,367.08 points. The Dow Jones Industrial Average gained 337.28 points or 0.79%, reaching 43,077.70 points.

The financial sector continues to support the market

The U.S. stock market as a whole showed positive performance, with the financial sector seeing the most significant growth. According to Michael Kantrowitz, chief investment strategist at Piper Sandler, investors have shifted some funds away from major tech companies in favor of large financial institutions.

This capital movement is logical, Kantrowitz said, as the current economic environment is boosting the profitability of banks, while the main driver of growth for tech companies—optimism surrounding artificial intelligence—remains speculative.

Supporting his statement, Morgan Stanley shares closed at a record high, rising 6.5%. This growth was driven by strong profitability, primarily due to a significant increase in investment banking revenues. Other major players, such as JPMorgan Chase, reported similar results.

Regional banks, which are traditionally less reliant on investment banking, also saw positive results. Shares of First Horizon rose 4.1%, while U.S. Bancorp gained 4.7%, thanks to positive third-quarter financial results.

Overall, the index tracking the financial sector rose by 1.2%, while the regional banks index climbed by 1.5%.

Tech corporations mostly close lower

Despite the overall positive market trend, major tech companies showed mixed performance. Apple shares, after reaching a record high the previous day, fell by 0.9%. Alphabet, Meta Platforms, and Microsoft also closed with slight losses ranging from 0.2% to 1.6%.

Meanwhile, chip giant Nvidia managed to buck the trend, gaining 3.1% after significant losses in the previous session.

It’s worth noting that the so-called “Magnificent Seven” tech companies have largely contributed to setting new records on Wall Street this year. However, with increasingly high valuations for these companies and improving economic prospects, investors are beginning to explore new investment opportunities.

This is evidenced by the fact that four of the eleven sectors in the S&P 500 index—utilities, materials, and industrials—set new all-time highs.

Michael Kantrowitz of Piper Sandler, while noting increased activity among small-cap stock buyers in recent days, expressed caution about a broad portfolio rotation into this segment. He believes that investors are more likely expanding the diversification of their portfolios while still favoring stocks with strong fundamentals. In other words, they are buying quality small-cap stocks but are not rushing into high-yield assets that typically attract attention during large-scale portfolio rotations.

Notably, in addition to the sectors mentioned above, financial companies also recorded all-time closing highs.