Broadcom drives rotation trade

Briefing.com Summary:

*Broadcom (AVGO) is down sharply after its earnings report and has taken the wind out of the sails of the tech sector.

*There appears to be some rotation out of high-beta stocks and into lower-beta industrial names.

*Initial jobless claims increased from the prior week, but not in a truly concerning way.

The stock market is looking lopsided this morning, with weakness in the technology sector sticking out like a sore thumb against an otherwise healthy-looking Dow Jones Industrial Average. The disparate moves reflect a rotation away from the leading tech stocks and into the lower-beta, more traditional blue-chip shares.

Currently, the S&P 500 futures are down 22 points and are trading 0.2% below fair value, the Nasdaq 100 futures are down 321 points and are trading 1.0% below fair value, and the Dow Jones Industrial Average futures are up 479 points and are trading 1.1% above fair value.

Broadcom (AVGO) is a focal point for today’s action. It is down 15% in pre-market trading following an earnings report and guidance that met or exceeded key metrics but which failed to live up to the sky-high expectations embedded in the stock price.

That sell-off has set the tone for the tech sector, which is also feeling the pinch of weakness in CrowdStrike (CRWD), Ciena (CIEN), and Veeva Systems (VEEV) following their earnings reports.

Their losses and a general disposition toward some profit-taking after a red-hot run help explain the underperformance of the S&P 500 and Nasdaq 100 futures. The Dow futures performance is a little more confounding, only because the Dow Jones Industrial Average was down more than 600 points yesterday, and it is already recouping the bulk of that loss without a major news catalyst to account for the quick recovery.

Presumably, the outperformance is a function of rotational interest away from high-beta tech stocks and into lower-beta industrial names that have trailed the tech sector’s performance. It may not register looking at the futures for the other indices, but that is bull market action. Capital rotates within the market, as opposed to out of the stock market altogether.

The latter point notwithstanding, there are some vestiges of safe-haven rotation into Treasuries this morning. The 2-yr note yield is down five basis points to 4.04%, and the 10-yr note yield is down four basis points to 4.45%, helped as well by oil prices sliding (WTI -3.3%, or $3.19, to $92.83/bbl) on ceasefire talk.

Those moves had been established before today’s data were released at 8:30 a.m. ET, yet neither the initial jobless claims nor the revised Q1 productivity report moved the market.

Initial jobless claims for the week ending May 30 increased by 13,000 to 225,000 (Briefing.com consensus: 216,000). Continuing jobless claims for the week ending May 23 decreased by 8,000 to 1.777 million.

The key takeaway from the report is that there isn’t any concerning key takeaway. Granted, initial jobless claims—a leading indicator—were up from the prior week, but they remain at levels that are consistent with an otherwise solid labor market.

First quarter productivity was revised down to 0.3% (Briefing.com consensus: 0.8%) from the preliminary estimate of 0.8%. Unit labor costs were revised down to 1.8% (Briefing.com consensus: 2.3%) from the preliminary estimate of 2.3%.

The key takeaway from the report is the understanding that productivity has picked up nicely from a year ago (+2.8%), while unit labor costs (+0.5%) have come down, tempering concerns about labor-based inflation pressures.

—

Originally Posted June 4, 2026 – Broadcom drives rotation trade