STORY: U.S. stocks closed mostly lower on Wednesday, with the Dow ending little changed, the S&P 500 shedding about a quarter of a percent and the tech-heavy Nasdaq dropping roughly two-thirds of a percent.
Tech stocks have been pulling back after driving much of the recovery from stocks' April selloff, while sectors such as energy, healthcare and consumer staples rose.
The rotation from growth stocks to value stocks is linked to investors' expectations for lower borrowing costs, said Matt Stucky, chief portfolio manager for equities at Northwestern Mutual Wealth Management Company.
“Typically, what you tend to see is a broader market participation when monetary easing comes back into the picture. We might start to see that in September. And so some of this outperformance of value in the last couple of weeks, I think, is somewhat reliant on that coming to fruition, which again is just the Federal Reserve starting to resume interest rate cuts.”
Discussion of those rate cuts could come Friday, when Fed Chair Jerome Powell speaks from the central bank's annual symposium in Jackson Hole, Wyoming.
Meanwhile, the Magnificent 7 megacap tech stocks all fell on Wednesday, including AI darling Nvidia, which reports quarterly results next week.
And fellow chip makers Intel and Micron Technology dropped 7% and 4% respectively.
Among other movers, Target tumbled more than 6% after the company named a new CEO and retained its annual forecasts that had been lowered in May.
