The Dow Jones Industrial Average climbed to another record on Friday as investors continued to rotate out of technology shares and into value-oriented sectors.
The 30-stock index gained 114 points, or 0.2%, while the S&P 500 slipped 0.1% and the Nasdaq Composite declined 0.3%.
Broadcom fell 6% despite beating fourth-quarter expectations and issuing a strong forecast that included expectations for artificial intelligence chip sales to double.
The slump reflected ongoing pressure on the broader AI trade, which extended into Friday’s session and weighed on other chipmakers, including AMD and Micron.
In contrast, Lululemon surged 11% after the athletic apparel retailer said its chief executive will step down at the end of January following a year of underperformance.
Value sectors lead as investors rebalance post-Fed
The market’s latest shift continued a rotation trend that accelerated on Thursday, when investors moved into cyclical stocks seen as more sensitive to the economic outlook while trimming exposure to growth names tied to artificial intelligence.
Financials, health care and industrials benefited in early trading on Friday.
Citigroup, Eli Lilly and GE Aerospace were among notable gainers within those sectors.
This rotation follows the Federal Reserve’s third interest-rate cut of the year on Wednesday.
The move helped lift the Dow and S&P 500 to record closes on Thursday, even as the Nasdaq finished lower due to weakness in major technology components such as Alphabet and Nvidia.
The Dow was supported by a 6% rally in Visa and strong performance from Nike and UnitedHealth Group.
For the week, the S&P 500 is up 0.45%, while the Dow has gained almost 1.6%.
The Nasdaq is lagging, with gains of less than 0.1%. Small-cap stocks have outperformed, with the Russell 2000 index rising 2.7% and hitting a fresh all-time high on Thursday.
The divergence underscores investors’ changing preferences as rate cuts reshape expectations for borrowing costs and corporate profitability.
Smaller companies, whose financing costs are more closely tied to market rates, tend to benefit more immediately from monetary easing.
Goldman Sachs sees strong earnings growth ahead
Goldman Sachs analysts led by Ben Snider forecast that earnings per share for S&P 500 companies will rise 12% in 2026, followed by a 10% increase in 2027.
The firm expects productivity improvements linked to artificial intelligence to play a growing role, estimating AI will contribute roughly 0.4% to earnings growth in 2026 and 1.5% in 2027.
Snider noted that enterprise AI adoption remains in the early stages, with larger corporations making more progress than smaller firms.
He added that “healthy nominal top-line growth, a fading drag from tariffs, and continued earnings strength for the largest stocks in the index” should support profitability through the period.
Snider, who will become Goldman’s chief US equity strategist at year-end, reaffirmed his target for the S&P 500 to reach 7,600 points in 2026—about 10% above current levels.
Other major institutions, including Morgan Stanley, Deutsche Bank and RBC Capital Markets, have also projected double-digit gains for US equities next year, citing economic resilience, expanding earnings and ongoing investor appetite for risk assets.
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