US stocks reversed earlier losses and finished higher as investors rotated back into traditional economic sectors. The S&P 500 and Nasdaq each gained 0.5%, while the Dow advanced 1.2%. Long-term Treasury yields fell alongside a drop in key energy prices, reinforcing expectations that the Federal Reserve will refrain from back-to-back rate hikes at its meeting next week.
Cyclical sectors stabilized after yesterday’s selloff, with banks and asset managers posting strong rebounds. A healthcare gauge climbed to a record high, driven by gains of more than 4% in Eli Lilly, Merck, and Johnson & Johnson.
Sentiment toward AI-related stocks remained fragile. South Korean AI firm Elice slumped 32% in its Seoul IPO debut, the latest sign that markets may be growing weary of the heavy funding demands from chipmakers and data center operators. SpaceX traded slightly below the flatline ahead of its earnings release after the closing bell, an event that may have been brought forward to pave the way for another capital raise.