After two strong sessions to start the week, the major averages finished mostly lower in the midweek session as the recent rally in cyclical stocks took a step back. A solid showing from the mega-caps, which have been muted in recent sessions, helped the Nasdaq Composite (+0.2%) outperform and the S&P 500 (-0.3%) notch a record intraday high before retreating. Weakness across the broader market saw the DJIA (-0.9%) underperform. 

The industrials sector (-1.9%) was the worst-performing cyclical sector today. Notably, President Trump said via Truth Social, "I will not permit dividends or stock buybacks for defense companies until such time as these problems are rectified," citing executive pay and slow production of military equipment as the problems. Aerospace and defense names lagged as a result, sending the iShares DJ Aerospace 1.7% lower. 

The materials sector (-1.6%) faced a similar loss as precious metals prices fell, while the energy sector (-1.2%) faced pressure as crude oil futures settled today's session $1.14 lower (-2.0%) at $55.99 per barrel.

President Trump announced that Venezuela will immediately begin providing the U.S. with 30-50 million barrels of oil, which helped some refiner names, such as Valero Energy (VLO 183.86, +5.59, +3.14%), still notch nice gains. 

Elsewhere, the financials sector (-1.4%) saw some selling pressure in major banking names ahead of a busy week of earnings reports next week. 

Despite the relatively broad weakness that saw eight S&P 500 sectors finish lower, losses at the index level were somewhat mitigated by several strong mega-cap performances. The communication services (+0.8%) and information technology (+0.1%) sectors both finished well off of session highs, though Alphabet (GOOG 322.48, +7.93, +2.52%), Microsoft (MSFT 483.49, +4.98, +1.04%), and NVIDIA (NVDA 189.18, +1.94, +1.03%) helped keep the sectors in positive territory. 

The information technology sector in particular faced mounting pressure as chipmakers gave back yesterday's advance, sending the PHLX Semiconductor Index 1.0% lower.

Afternoon selling pressure did significantly lessen gains across the mega-caps, with the Vanguard Mega Cap Growth ETF (+0.5%) finishing with under half of its earlier gain. Still, the market's weightiest components helped limit losses in the market-weighted S&P 500 (-0.3%), which decidedly outperformed the S&P 500 Equal Weighted Index (-1.2%). 

Elsewhere, the health care sector (+1.0%) captured the widest gain today. Eli Lilly (LLY 1108.14, +44.10, +4.14%) was a top performer after The Wall Street Journal reported the company is in talks to acquire Ventyx Biosciences (VTYX 13.73, +3.68, +36.62%), while AbbVie (ABBV 233.43, +9.50, +4.24%) captured a similar gain, with The Wall Street Journal reporting the company looks to acquire Revolution Medicines (RVMD 102.71, +22.86, +28.63%). 

Outside of the S&P 500, the Russell 2000 (-0.3%) and S&P Mid Cap 400 (-0.8%) gave back a chunk of yesterday's advance. 

Today's session reflected some back-and-forth action as the market navigates the stretch between the holidays and earnings season. The cyclical rally faced a speed bump, but mega-cap leadership helped keep the major averages with solid week-to-date gains, and the S&P 500 near its own record high from earlier in the session. 

U.S. Treasuries had a resilient showing on Wednesday, as longer tenors sustained their early gains in the face of some early pressure while the short end lagged, but still finished in the green. The 2-year note yield settled down one basis point to 3.47%, and the 10-year note yield settled down four basis points to 4.14%.

• Russell 2000: +3.8% YTD
• S&P Mid Cap 400: +3.4% YTD
• DJIA: +1.9% YTD
• Nasdaq Composite: +1.5% YTD
• S&P 500: +1.1% YTD

Reviewing today's data:

• Weekly MBA Mortgage Applications Index -9.7%; Prior -5.0%
• December ADP Employment Change 41K (Briefing.com consensus 45K); Prior was revised to -29K from -32K
• December ISM Non-Manufacturing Index 54.4% (Briefing.com consensus 52.2%); Prior 52.6%
  • The key takeaway from the report is that activity in the services sector accelerated in December to its best level for 2025, accented by the first expansion reading for the employment index since May 2025.
• October Factory Orders -1.3% (Briefing.com consensus -1.0%); Prior 0.2%
  • The key takeaway from the dated report is that it was better than the headline suggests thanks to a pickup in business spending that was reflected in the increase in new orders for nondefense capital goods excluding aircraft.
• November JOLTS - Job Openings 7.146 mln; Prior was revised to 7.449 mln from 7.670 mln