Dow Jones Hits New Record High. Broadcom Shares Fall Over 15% Triggering Tech Selloff as Market Worries About AI Industry Prospects

Tradingkey - On June 4, Eastern Time, because Broadcom's ( AVGO) Q2 earnings guidance was interpreted by the market as being too conservative, U.S. tech stocks saw broad declines today. The three major indices diverged: the Dow Jones Industrial Average rose more than 1.7% to hit a new record high, while the tech-heavy Nasdaq Composite fell over 0.4%.

Broadcom's stock price tumbled more than 15% today, hitting a low of $403.01, with its latest market capitalization at $1.96 trillion. The plunge in this leader of custom chips has triggered market skepticism regarding the prospects of the AI industry.

Market analysis suggests that Broadcom's stock has risen nearly 40% year-to-date, with its valuation at historic highs and the market holding 'priced for perfection' expectations. Consequently, any management statements that were merely 'in line with expectations' rather than 'beating expectations' easily triggered large-scale profit-taking.

Broadcom's downward trajectory also weighed on related technology stocks. The Philadelphia Semiconductor Index fell over 6% at one point today, with 22 of its 30 constituents recording losses. As of press time, Micron Technology (MU) and Arm (ARM) fell over 6%, while Qualcomm (QCOM) and AMD (AMD) dropped more than 3%.

Among the 30 constituents of the Dow Jones Industrial Average, 21 recorded gains: UnitedHealth (UNH) rose 5.09%, American Express (AXP) gained 4.64%, Goldman Sachs (GS) climbed 4.18%, Merck (MRK) added 3.72%, Visa (V) rose 3.15%, JPMorgan Chase (JPM) gained 2.82%, and Boeing (BA) rose 2.36%.

JPMorgan Chase recently stated that in this AI-driven bull market, low-volatility stocks have been overlooked by the market. Regardless of the future direction of U.S. Treasury yields, low-volatility stocks—such as consumer staples, utilities, insurance, and certain industrials—possess allocation value.