Dow Jones vs Nasdaq Index: US Stocks Forecast Highlights Growing Divergence

Dow Futures Rise as Value-Led Rally Pushes Indexes to Records

U.S. equity futures pointed higher Friday following a session that saw renewed demand for cyclical and value stocks lift the Dow Jones Industrial Average and S&P 500 to fresh record closes. The advance reflected investor confidence in economic resilience after the Federal Reserve’s latest rate cut, even as growth and technology shares faced renewed pressure.

Dow futures added 82 points, or 0.2%, while S&P 500 futures slipped 0.2%. Nasdaq-100 futures fell about 0.5%, signaling continued near-term rotation away from high-growth technology leaders.

How Are Treasury Yields Reacting to the Fed’s Latest Cut?

Treasury yields moved higher as markets assessed the Fed’s policy outlook. The 10-year Treasury yield rose more than 3 basis points to 4.178%, while the 2-year yield increased over 1 basis point to 3.547%. The 30-year yield climbed to 4.832%. Investors appeared to price in a central bank willing to ease further if labor conditions weaken, but without urgency.

Fed Chair Jerome Powell reiterated that job growth has likely turned negative in recent months and that labor supply and demand continue to soften. These remarks reinforced expectations that policymakers may lean toward additional rate cuts if employment data fails to stabilize heading into 2026.

The U.S. dollar weakened Thursday, touching multi-month lows against the euro, supporting risk appetite in equities.

Why Are Cyclicals Outperforming Growth Stocks?

Thursday’s rally was driven by strong inflows into economically sensitive sectors as investors reduced exposure to AI-linked growth names. The Dow surged 646 points, or 1.3%, supported by a 6% jump in Visa and solid gains in Nike and UnitedHealth Group. The Nasdaq Composite closed 0.3% lower as Alphabet and Nvidia declined.

This rotation extended into smaller companies, with the Russell 2000 up 2.7% this week after reaching a new all-time high. By contrast, the Nasdaq has gained less than 0.1% week to date.

Which Stocks Are Driving Premarket Action?

Broadcom fell 6% in premarket trading despite beating fourth-quarter estimates and raising its revenue forecast, reflecting investor caution toward AI hardware demand.

Lululemon jumped over 9% after announcing CEO Calvin McDonald’s departure and reporting earnings above expectations.

Tilray Brands surged 28% following reports that federal marijuana restrictions could be eased.

Citigroup rose more than 1% after JPMorgan upgraded the stock to overweight, citing leverage to strong markets activity.

Market Forecast: Bullish Bias With Rotation Risk

Near-term sentiment favors a cautiously bullish outlook for U.S. equities, anchored by Fed easing and improving breadth beyond megacap technology.

Continued leadership from cyclicals and small caps would support further gains, though pressure on growth stocks could cap upside for the Nasdaq.

Traders will watch upcoming labor data and Fed commentary closely for confirmation that policy support remains intact.

More Information in our Economic Calendar.