Stock market today: Wall Street steadies following its sell-off as smaller stocks rise up

NEW YORK — Wall Street’s split is widening Thursday, as smaller stocks and other formerly unloved areas of the market rise up while superstar Big Tech stocks give back more of their stellar gains.

The mixed trading left the S&P 500 down by 0.3% in morning trading, a day after its worst loss since 2022 led to a wipeout for financial markets circling the world. The Dow Jones Industrial Average was up 180 points, or 0.5%, as of 10:20 a.m. Eastern time, and the Nasdaq composite was down 1.1%.

Weighing on Wall Street were continued losses for Nvidia and most of the handful of stocks that have been the main reasons the S&P 500 has set dozens of all-time highs this year. They had tumbled a day earlier after profit reports from Tesla and Alphabet underwhelmed and raised concerns investors’ frenzy around artificial-intelligence technology had sent prices for Big Tech stocks too high.

Six of the group of stocks known as the “Magnificent Seven” fell, with all dropping at least 1.4%, and were among the heaviest anchors on the S&P 500. Only Tesla rose among them.

But the drop for the S&P 500 masked a market where the majority of U.S. stocks were rising. Even within the S&P 500, three out of every four stocks were climbing.

They rallied after a report indicated the U.S. economy grew at an estimated 2.8% annual rate from April through June, double the rate from the prior quarter and easily topping economists’ forecasts for 1.9%. That eased worries about a possible recession, or at least delays them further, even though interest rates remain high and are grinding down on the economy.

Perhaps just as importantly for Wall Street, the report on the economy wasn’t so hot that it fanned worries about upward pressure on inflation.

Because inflation has largely resumed its slowdown following a rough start to the year, traders are largely expecting the Federal Reserve to begin cutting its main interest rate in September, according to data from CME Group.

Such cuts would release pressure that’s built up on both the economy and financial markets, and investors are thinking it could offer a particularly big boost to smaller stocks and other areas of the market that have been left behind by Big Tech in recent years.

The Russell 2000 index of smaller stocks climbed 1.1%, doing better than other market indexes. It’s up mor than 8% this month, versus a 1% dip for the big stocks in the S&P 500, and has flipped the market’s leaderboard.

In the bond market, the yield on the 10-year Treasury slipped to 4.22% from 4.28% late Wednesday. It’s down significantly from its perch above 4.70% reached in April, which gives a strong boost to stock prices.

Hasbro jumped 4% after reporting stronger profit and revenue for the latest quarter than analysts expected, in part because of growth at its Wizards of the Coast business, which sells Magic: The Gathering and other games.

IBM was one of the biggest reasons for the Dow Jones Industrial Average’s climb, and it rose 3.6% after delivering stornger profit and revenue than expected for the last quarter.

On the losing side of Wall Street was Ford Motor, which tumbled 17.2% after reporting profit that fell short of analysts’ expectations. Its second-quarter net income fell 4.7% as its combustion-engine unit posted a pretax loss because of rising warranty and recall costs.

In stock markets abroad, indexes dropped following Wall Street’s wipeout on Tuesday. They fell 3.3% in Tokyo, 1.8% in Hong Kong and 1.8% in Paris as worries spread about whether companies globally would meet expectations for profit growth and about potential moves by central banks on interest rates.

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AP Business Writers Yuri Kageyama and Matt Ott contributed.