Key Highlights

● Financials and real estate were two of six S&P 500 sectors to finish higher.

● Blackstone jumped to $118.75 after distributable earnings of $1.32 a share beat estimates.

● Nasdaq Inc. jumped to $103.30 after a quarterly beat with revenue of $1.48 billion.

● Mortgage rates eased in a weekly survey as the 10-year Treasury yield fell.

Financials and real estate joined consumer staples, health care and utilities on the winning side of Thursday's market on October 22, as investors rotated out of artificial-intelligence stocks and Treasury yields tumbled.

Both sectors rose solidly, according to the day's sector data, making them two of the six S&P 500 sectors to finish higher. The S&P 500 itself fell 93.74 points to 7,663.43, its worst day since July, while the Dow Jones Industrial Average edged up 11.89 points to 52,867.98.

Blackstone sets the tone

The standout in financials was Blackstone (NYSE:BX), which jumped to $118.75 after third-quarter results. Distributable earnings came in at $1.32 a share, beating estimates of $1.26, with about $1.368 trillion in assets under management and $63 billion of inflows. The firm said fourth-quarter performance fees from closed deals are expected to exceed third-quarter total net realizations.

"Seldom in my career have I seen such a supply-constrained market of this scale," Blackstone's Stephen Schwarzman said. Chief Operating Officer Jon Gray said: "The underlying business is actually quite strong."

Widening spreads on AI-related debt could let Blackstone lock in higher returns, according to one report. Peers Ares (NYSE:ARES), Carlyle (NASDAQ:CG), KKR (NYSE:KKR), Blue Owl (NYSE:OWL) and Apollo (NYSE:APO) rose in sympathy.

Exchanges, upgrades and bank beats

Exchange operators also shone. Nasdaq Inc. (NASDAQ:NDAQ) jumped to $103.30 after a quarterly beat, with revenue rising to $1.48 billion. CME Group (NASDAQ:CME) climbed after one bank upgraded it two notches to Overweight from Underweight and lifted its price target to $367 from $250.

Block rose after an analyst upgrade to Outperform. Berkshire Hathaway (NYSE:BRK.B) hit an all-time high during the session.

Regional lenders reporting results also rallied. Valley National Bancorp (NASDAQ:VLY) rose after adjusted earnings of $0.36 a share beat estimates of $0.33, and its efficiency ratio was its best since the third quarter of 2021. Cathay General Bancorp (NASDAQ:CATY) climbed near a 52-week high after record net interest income of $211.9 million, and S&T Bancorp posted record quarterly earnings per share.

Not all financials gained. Goldman Sachs (NYSE:GS) slipped to $891.30, with no company-specific news reported.

Real estate rides lower rates

Real estate stocks rose alongside the bond rally. The 10-year Treasury yield closed back below a closely watched threshold for the first time since September 22, and Freddie Mac's weekly survey showed mortgage rates easing, according to market data.

Property owners carry heavy debt and pay steady dividends, so lower yields can both cut their borrowing costs and make their income more attractive. Brandywine Realty Trust rose after third-quarter revenue beat estimates.

The picture was mixed among individual names, however. First Industrial Realty (NYSE:FR) fell after adjusted earnings missed estimates and it cut a fourth-quarter development-leasing assumption, even as CEO Peter Baccile said "national industrial real estate fundamentals continue to trend positively." CBRE also fell after results, according to market data.

A broad rotation

The gains in financials and property were part of a wider shift. About two of every three S&P 500 stocks rose, according to market data, and the equal-weight S&P 500 finished higher. "People are running away from tech," one strategist said.

Amex Earnings and the Fed Test

American Express (NYSE:AXP) reports on Friday, October 23, offering a fresh read on consumer spending and credit. The Federal Reserve's rate decision on October 28 is the next big test for rate-sensitive sectors. Markets priced a lower chance of a hike after Thursday's bond rally.

Third-quarter GDP and September PCE inflation data follow on October 29.