Dow rises as AI stocks fall and Dover buys Cloeren

The Dow rose as AI stocks fell on Tuesday, leaving Wall Street split between blue-chip earnings strength and renewed pressure on this year’s hardware winners. The Dow Jones Industrial Average gained more than 500 points, or 1.1%, while the S&P 500 added about 0.25% and the Nasdaq Composite was on track for a fifth consecutive decline, according to the CNBC Investing Club with Jim Cramer.

The Investing Club said the Dow benefited from upbeat results at companies outside the data-center trade. Coca-Cola and Sherwin-Williams, both Dow members, advanced after reporting revenue and profit above analyst estimates. Boeing, another Dow constituent and a club holding, also rose after second-quarter results that included stronger-than-expected free cash flow, prompting the club to upgrade its view on the stock.

Lower oil prices also helped the broader tone, the club said, with crude falling for a second straight session and pulling interest rates lower. Falling oil can ease concerns about inflation pressures, which can in turn reduce upward pressure on market interest rates.

Why did the Dow rise while AI stocks fell?

The session reflected a rotation away from AI-linked hardware shares and into parts of the market that had lagged or were supported by earnings. A market rotation occurs when investors shift exposure from one group of stocks to another, often after a crowded trade loses momentum or valuations are reassessed.

Several stocks tied to the AI and semiconductor supply chain were among the day’s weakest performers. The Investing Club cited declines of 7% to 15% in Sandisk, Dell, Micron, Western Digital, Applied Materials and AMD. Corning, also a club holding, fell roughly 15% even after reporting earnings that beat analyst estimates.

The club said the move showed the risk of steep advances when momentum turns. It also said some gains in non-AI stocks appeared more sentiment-driven than tied to company fundamentals, and noted that it trimmed its Procter & Gamble position before the company’s Wednesday morning earnings report. The club said it wanted to guard against the risk of a cautious outlook at the start of Procter & Gamble’s fiscal 2027.

Software shares moved in the opposite direction from semiconductor-linked names. The iShares Expanded Tech-Software Sector ETF was on pace for a third straight gain, while the VanEck Semiconductor ETF was set for a fourth consecutive decline, according to the club.

Dover adds Cloeren in small acquisition

Dover announced Tuesday that it acquired privately held Cloeren Incorporated for an undisclosed sum. The Investing Club described Cloeren as a global producer of high-performance, custom-designed machinery used in making plastic products.

The club said the acquisition fit Dover’s pattern of adding niche businesses that extend its existing operations. It also said the transaction was not large enough to change its view on Dover, and that it preferred larger, accretive acquisitions tied to markets with long-term growth. The club said an execution misstep hurt Dover’s second-quarter results last week and led it to lower its rating to 3, meaning sell into strength.

What comes next for earnings and the Fed?

The Investing Club said several companies tied to the AI trade were scheduled to report after the close, including Seagate Technology, KLA Corporation and Bloom Energy. Visa, Ford Motor and Cheesecake Factory were also on the earnings calendar.

Wednesday’s scheduled reports include Procter & Gamble, SoFi, Boston Scientific, Vertiv Holdings, Amphenol, Flex and Humana, according to the club. The club said there were no major economic data releases due Wednesday, but the Federal Reserve’s policy decision was expected. It said the Fed was widely expected to keep interest rates unchanged, while a growing number of voices believed the central bank could raise rates as soon as September.

This story draws on original reporting from CNBC.