The Dow Jones Industrial Average closed at a fresh record Thursday after a 12 percent slide in Broadcom split the U.S. stock market in two, sending investors out of the artificial-intelligence chipmakers that have led the year's rally and into health insurers, drugmakers and banks. The blue-chip average jumped 874.86 points, or 1.73 percent, to 51,561.93. The Nasdaq Composite slipped 0.09 percent to 26,830.96 and the S&P 500 added 0.41 percent to close at 7,584.31.

The split tape marks the clearest break yet in a rally that has run almost entirely through a narrow group of semiconductor and hyperscaler stocks. Nine of the S&P 500's 11 sectors advanced, led by health care and financials, two groups that have lagged the index all year. The question facing portfolio managers heading into Friday's May employment report is whether the rotation widens the bull market or signals that the AI leadership cohort, which had carried major averages to records into late May, is finally tiring.

What shifted

The trigger came from Broadcom, which reported fiscal second-quarter revenue below Wall Street estimates after the bell Wednesday and lost more than 12 percent on Thursday. The drop pulled the chip complex with it. The VanEck Semiconductor ETF (SMH) fell more than 1 percent. Arm Holdings shed more than 4 percent and Micron Technology dropped close to 8 percent, according to CNBC.

Money moved straight into groups that have spent most of 2026 on the sidelines. Insurers Humana and Centene set new one-year highs, and UnitedHealth Group closed just below its May peak. Eli Lilly rallied more than 4 percent. Options activity in the State Street Health Care Select Sector SPDR (XLV) ran roughly five-to-one in favor of calls, with about 5,300 calls trading against just over 1,000 puts, according to ThinkOrSwim data cited by CNBC.

Asia takes the hit

With U.S. markets closed, the bill for the AI repricing landed in Asia on Friday. South Korea's Kospi fell 5.54 percent to 8,160.59, its steepest one-day drop of the year. Samsung Electronics lost 6.40 percent and SK Hynix, the principal supplier of high-bandwidth memory chips for AI accelerators, fell 9.92 percent. The small-cap Kosdaq dropped 4.50 percent.

Japan's Nikkei 225 fell 1.31 percent to 66,588.12. Australia's S&P/ASX 200 dropped 0.70 percent and mainland China's CSI 300 slid 1.79 percent to 4,816.92. Hong Kong's Hang Seng was down 1.11 percent in its last hour of trade. South Korea's labor minister used the morning's losses to press Samsung and SK Hynix to share more of the AI windfall with workers and suppliers, saying record profits risk widening income inequality, CNBC reported.

On the sidelines

Bitcoin extended a separate slide. The cryptocurrency traded at about $62,500 Friday, more than 50 percent below its September 2025 record near $126,000 and on course to finish the week down more than 15 percent. Charles-Henry Monchau, chief investment officer at Syz Group, told CNBC the move reflected forced selling by treasury company Strategy and what he called a crowding-out effect. "Speculators are going all-in on AI stocks and memory chips, especially in Korea, and the market also anticipates that upcoming monster IPOs will divert some retail money into the new stocks," Monchau said. The James St. Journal reported Wednesday that bitcoin had already erased its Iran-war gains and that bitcoin ETFs were posting their longest-ever streak of net outflows.

Geopolitics added a second layer of risk. Hezbollah chief Naim Qassem on Thursday rejected a conditional truce brokered by U.S. and Lebanese envoys, demanding a full Israeli withdrawal, and Israel's air force struck the southern Lebanese village of Arqoun on Friday after warning residents of six towns to evacuate, CBS News reported. Iranian Foreign Minister Abbas Araghchi told Lebanese outlet Al Mayadeen that the war had become a source of strength for Iran and that the country had endured 40 days of strikes before forcing Washington to seek negotiations, CBS News reported.

The other read

Not everyone read Thursday as the end of the AI trade. Strive Chief Executive Matt Cole told CNBC's "Squawk Box Europe" on Friday that bitcoin's fundamentals had "never been better" and called the slide a buying opportunity. Rajiv Sawhney, head of international portfolio management at Wave Digital Assets, noted to CNBC that the 30-day correlation between bitcoin and the Nasdaq, which had run near a perfect positive reading a month ago, has collapsed in recent weeks, suggesting the cryptocurrency's slide is at least partly idiosyncratic rather than a verdict on risk assets broadly. CBS reported that President Trump, asked about Hezbollah's rejection of the truce, told reporters in the Oval Office on Thursday that the group had in fact called the United States asking how to stop the fighting, an account at odds with Qassem's public statement.

The Labor Department releases the May employment report at 8:30 a.m. Eastern on Friday. A soft print would test whether the rotation that lifted the Dow can hold without the AI complex pulling alongside it, or whether Thursday's split tape was the start of a broader repricing of the year's winners.