Stock market today: Live updates

The S&P 500 and Nasdaq Composite retreated on Wednesday as the rotation out of high-flying technology shares continued.

The broad S&P 500 traded 1.1% lower, while the tech-heavy Nasdaq slid 2.2%. The Dow Jones Industrial Average added 107 points, or 0.3%, lifted by a gain of more than 3% in UnitedHealth following a Wall Street upgrade on the back of its strong earnings report.

Meta tumbled around 4%, while Apple, Netflix and Microsoft all dropped more than 2%. That offered the latest sign of investors pulling back on megacap technology after the group’s monster run this year as artificial intelligence captured the market’s interest.

Semiconductor stocks struggled in particular within the tech sector following a Bloomberg News report that the Biden administration is considering tougher trade restrictions if companies continue granting China access to U.S.-made technology.

The VanEck Semiconductor ETF (SMH) fell about 4% following the report. Nvidia and U.S.-listed shares of Taiwan Semiconductor lost around 5% and 2%, respectively.

The Russell 2000 vacillated between gains and losses in the session, putting its five-day win streak at risk. Still, the small cap-focused index has climbed almost 11% over the last five trading days as the market rally broadened out. Meanwhile, the Nasdaq has shed more than 1% in the same period with investors taking profits on tech names that have seen huge returns this year.

This rotation comes as traders have become more optimistic on interest rate cuts, which should benefit small caps and companies with higher financing costs. Fed funds futures trading implies a 100% likelihood the Federal Reserve will lower rates in September, according to the CME FedWatch tool.

“People are literally just selling some of the megacaps, taking some profits, and buying some of those more cyclical companies,” said Mike Dickson, head of research and quantitative strategies at Horizon Investments. “I would not be surprised to see this continue until earnings.”