The S&P 500 and Nasdaq Composite dropped on Thursday, building on the previous session's losses as investors continued to dump some of 2024's leading technology stocks.

The S&P 500 declined 0.51% to finish at 5,399.22, while the Nasdaq dropped 0.93% to settle at 17,181.72. The Russell 2000 gained 1.26% as investors continued their rotation into small caps.

The Dow Jones Industrial Average outperformed the major averages, rising 81.20 points, or 0.2%, to close at 39,935.07. The 30-stock index surged nearly 585 points, or about 1.5%, at session highs.

Investors ditched tech for a second day. Nvidia lost 1.7%, while Advanced Micro Devices shed more than 4%. The VanEck Semiconductor ETF (SMH) sold off by nearly 2%, while Meta Platforms fell 1.7% and Microsoft slumped 2.5%. Alphabet declined more than 3%.

"There's a changing of the guard happening on Wall Street. The AI stocks that led on the way up are now leading on the way down," said Adam Sarhan, CEO of 50 Park Investments, adding that these movements are not uncommon during a bull market "great mini rotation."

"During bull markets, you see one sector lead, then it pauses, corrects and passes the baton," he said. "Think of it like a relay race over to another sector."

Investors also assessed a second-quarter GDP report that showed the economy grow 2.8%, much more than expected. Economists surveyed by Dow Jones had anticipated growth of 2.1%.

Wall Street came off of a losing session, with the S&P 500 and Nasdaq suffering their biggest one-day pullbacks in more than a year. Those losses were spurred by disappointing tech earnings reports.

Investors have come to view the recent declines as a sign of an overdue correction in an overbought market, which is now seeing a rotation away from megacap tech into small-cap stocks and more cyclical areas.

Ford Motor shares tumbled 18.4% for their worst day since 2008 after second-quarter earnings came in much lower than analysts expected. ServiceNow popped 13% on stronger-than-expected earnings, notching its best day since 2019. Edwards Lifesciences shed 31% for its worst day since 2000 after slashing its forecast for transcatheter aortic valve replacements.