Tech Stocks Slipped on Tuesday, but the Dow Rose
The Nasdaq Composite, a stock index packed with tech companies, closed at 26,424.82 on Tuesday. It was down 0.02%. The Dow Jones Industrial Average rose 1.02% to 52,495.88, according to CNBC's live market blog. The S&P 500 added 0.28% to 7,712.57 in the same report.
The gap between the two matters more than the size of the moves. On Monday, the Nasdaq had climbed more than 1% as the AI trade came back. On Tuesday, it lost that momentum while the Dow moved up.
Most of the Dow's gain came from 3M. Its shares jumped more than 5% after the company reported better-than-expected earnings, meaning profit beat what analysts had predicted. It also raised its full-year guidance, its forecast for the whole year.
In my view, one company's good news can lift the Dow more easily than it can lift the Nasdaq. The Dow weights companies by share price. The Nasdaq weights them by total market value, so the biggest companies count the most.
Tech had a rough stretch before this. A WSJ live blog for October 16 said the index finished the week down 4.5%. The headline read "Nasdaq Slump Worsens as AI Anxieties Mount." An AP market report from the same day said the Nasdaq sank 2.1% in one session. It was the first weekly loss in five weeks.
On Monday, the rebound looked broader. CNBC reported the S&P 500 up 0.41% to 7,690.73. By Tuesday's close, the tech rebound had faded. The Nasdaq's 52-week high is 27,722.75, set on October 6 according to CNBC's quote page. The index sits about 4.7% below that peak.
A WSJ article dated October 20 said at 6:44 a.m. ET that the tech rebound appeared to have lost momentum. It also said SpaceX alone could add around 1% to a U.S. stock index.
This is the concentration problem in simple terms. Think of the Nasdaq like a class grade where the top students count the most. One big new company can move the whole index by a full percentage point, so an index move may tell you less about the wider market than it seems.
A Reuters video dated October 21 carries the headline "SpaceX results show AI moving beyond hyperscalers, says investor." Its description says the Nasdaq leads Wall Street gains.
In my view, these reports suggest the market is leaning on a small group of companies. Whether that lean holds is the big question for the coming days.
Some of those companies moved differently on Tuesday. Western Digital gained more than 3%, and Seagate Technology rose more than 2%. CoreWeave and Marvell Technology each rose more than 1%, per CNBC. A Reuters report dated October 15 said CoreWeave's shares steadied after a sharp drop. Investors were worried about the borrowed money that funds its business.
Some AI companies are funded with debt. Those are the ones to watch most closely when interest rates move, because they depend on loans as much as on customers.
CNBC reported that WTI crude futures, a main oil price, fell 1.8% to $101.79 a barrel. Brent fell 0.7% to $108.79. A Reuters report dated October 7 said Wall Street ended lower as Treasury yields rose. A yield is the return a bond pays its buyer, and it moves with borrowing costs. The WSJ's October 15 headline said investors were moving money out of tech.
Oil above $100 keeps inflation expectations high. Inflation is the rise in prices over time. High inflation expectations push Treasury yields up. Higher yields make distant profits less valuable today, which hurts many tech stocks. The Dow's strength this week fits that pattern, since money has been moving toward companies whose profits rise with the economy.
New listings were in the mix too. CNBC reported that Korean AI firm Elice fell more than 30% in its public market debut.
In my view, one weak debut does not prove a trend. It does show that investors' appetite for AI stocks has limits.
Here is what has been reported. The Nasdaq fell 0.02%. The Dow rose 1.02%. 3M jumped more than 5%. Crude fell nearly 2%. What is still open is whether the AI rebound comes back, whether oil stays above $100, and whether a few big companies keep steering the indexes. Those answers will come from prices over the next several sessions, not from one day's headline.
