The stock market faced a broad-based retreat, which sent the S&P 500 (-1.7%), Nasdaq Composite (-2.3%), and DJIA (-1.7%) firmly lower as investors grappled with diminished expectations for further Fed easing this year. 

President Trump signed a bill to fund the government through January 30, ending the longest government shutdown in U.S. history. While some viewed the move and pending data releases as potential fuel for another rate cut, uncertainty over the timing of those reports clouds the outlook for doves ahead of the December FOMC meeting. White House Press Secretary Karoline Leavitt said some reports, such as the October employment and October CPI reports, will likely never see the light of day.

The end to the government shutdown this week was largely priced in, but the market was seemingly caught off guard by recent Fed commentary, which has leaned more hawkish. 

Boston Fed President Susan Collins (voting FOMC member) said yesterday evening that "it will likely be appropriate to keep policy rates at the current level for some time," while St. Louis Fed President Alberto Musalem (voting FOMC member) said that the Fed "needs to lean against above-target inflation," according to Bloomberg. Cleveland Fed President Beth Hammack, who is not a voting FOMC member but will be in 2026, echoed a similar sentiment, saying policy should "remain somewhat restrictive to continue putting pressure to bring inflation down," according to Reuters. 

Commentary from Fed officials combined to see a further dampening in the market's expectations for a December rate cut. The CME FedWatch tool now assigns a 51.6% probability to a 25-basis-point rate cut at the December FOMC meeting, down from 62.9% yesterday and 95.5% a month ago. 

Equities retreated in response, with growth-oriented stocks incurring particularly heavy losses. 

The consumer discretionary (-2.7%) and information technology (-2.4%) sectors finished with the heaviest losses as weakness in the market's largest names pushed the Vanguard Mega Cap Growth ETF (-2.1%) to its flat line for the week. 

Tesla (TSLA 401.88, -28.72, -6.67%) was a laggard among the underperforming group, falling below its 50-day moving average (428.61). 

NVIDIA (NVDA 186.97, -6.83, -3.52%) and other chipmakers also posted weak performances, sending the PHLX Semiconductor Index (-3.7%) into negative territory for the week.

Cisco (CSCO 77.38, +3.42, +4.62%) was a rare bright spot in the technology sector after topping earnings estimates and issuing upbeat guidance for Q2 (Jan) and FY26. 

The same cannot be said for Walt Disney (DIS 107.57, -9.08, -7.78%), which was one of the worst-performing S&P 500 names after a mixed earnings report that saw the company beat EPS expectations but miss on revenues, which were down 0.5% year-over-year to $22.46 billion, marking the company's first annual revenue decline since 1Q24.

Disney's loss weighed on the communication services sector (-1.7%) and contributed to the DJIA finishing with a similar loss to that of the other major averages. 

Despite a recent trend of mega-cap weakness, the DJIA has been able to escape the past several sessions with solid gains as investors rotated into more value-oriented holdings. 

While mega-caps certainly underperformed again, today's action reflected less of a rotation and more of a broader-market sell-off. 

Eight S&P 500 sectors finished lower, and seven of those finished with losses of 1.0% or wider. Breadth figures were abysmal, with decliners outpacing advancers by a roughly 4-to-1 ratio on both the NYSE and the Nasdaq. 

While the S&P 500 Equal Weighted Index (-1.2%) still outperformed the market-weighted S&P 500 (-1.7%), it too incurred a notable loss. 

Only the energy sector (+0.3%) closed with a gain as crude oil futures settled today's session $0.24 higher (+0.4%) at $58.74 per barrel, a modest rebound from yesterday's 4.1% slide. 

The health care sector finished flat after holding a gain wider than 1.0% earlier in the session, while the consumer staples sector also managed a flat finish. 

Outside of the S&P 500, the Russell 2000 (-2.8%) and S&P Mid Cap 400 (-1.9%) incurred significant losses as the market displayed a firm risk-off posturing. 

Ultimately, today's action reflected a clear shift in sentiment as investors reassessed the policy outlook and revisited concerns of stretched valuations, leaving stocks particularly vulnerable to disappointing catalysts. The broad-based retreat, along with a sharp spike in volatility (the VIX Volatility Index surged 18.0% to 20.66), underscored growing unease about the Fed's policy path and the market's ability to sustain recent gains.

U.S. Treasuries retreated on Thursday, lifting yields on 10s and 30s back above their 50-day moving averages, though intraday action was largely uneventful. The 2-year note yield settled up two basis points to 3.59%, the 10-year note yield settled up five basis points to 4.11%, and the 30-year note yield settled up four basis points to 4.70%. 

• Nasdaq Composite: +18.4% YTD
• S&P 500: +14.6% YTD
• DJIA: +11.6% YTD
• Russell 2000: +6.7% YTD
• S&P Mid Cap 400: +2.9% YTD