STORY: The S&P 500 and Nasdaq tumbled on Wednesday as shares of chip makers plunged.
But the Dow extended its string of all-time closing highs, as the rotation out of megacap tech stocks continued.
The blue-chip index rose about six tenths of a percent. The S&P 500 dropped one-point-four percent and the tech-heavy Nasdaq plummeted almost two-point-eight percent.
A report that the Biden administration is considering severe trade restrictions against China exacerbated the decline in chip stocks, with the Philadelphia Semiconductor index marking its biggest one-day drop since March 2020.
But Robert Conzo, CEO and managing director of The Wealth Alliance, thinks the tech pullback is healthy given how high-flying these stocks have been.
"Now let's not kid ourselves, these large tech numbers are still up huge for the year. Nvidia is up 140-plus percent year-to-date, even though it 'pulled back,' it's still big. But it's nice to see some of these other areas coming into play. So we're excited about the pullback and we're excited about seeing some other areas come up that we rebalanced into earlier in the year. So it's I think a good time and a good setup for continued future market movements going forward."
Nvidia shed more than 6.5%, Meta Platforms lost more than 5.5% and Tesla dropped more than 3%.
Even the small-cap Russell 2000 index, which surged 11.5% over the last five sessions, snapped its longest winning streak in over four years. Investors instead showed renewed interest in more undervalued stocks.
Among other movers, Johnson & Johnson gained more than 3.5% after posting better-than-expected profit and revenue driven by strong drug sales.
