The major averages saw their push into record territory halted today, with the S&P 500 (-0.7%), Nasdaq Composite (-0.9%), and DJIA (-1.2%) all retreating from yesterday's record highs. The market faced a combination of pressures today, with mega-cap and select tech names facing some profit-taking after a strong stretch of leadership, while oil prices and Treasury yields rose in response to escalating geopolitical tensions.

Sector strength waned throughout the session, with six S&P 500 sectors finishing lower, three of which retreated by more than 1%.

The top-weighted information technology sector (-1.5%) was the worst-performing sector, making it for the major averages to notch gains today. Semiconductor stocks faced some choppiness but turned in another relatively strong finish, with the PHLX Semiconductor Index gaining 1.4%. However, NVIDIA (NVDA 214.90, -7.92, -3.55%) lagged amid a weak showing from "magnificent seven" names today.

Microsoft (MSFT 427.59, -13.72, -3.11%) finished with a similar loss, though the broader software space was also under pressure today, with the iShares GS Software ETF (IGV 100.20, -4.53, -4.33%) extending yesterday's slide. Palo Alto Networks (PANW 280.43, -16.75, -5.64%) moved sharply lower despite turning in a strong earnings report.

Amazon (AMZN 250.02, -6.50, -2.53%) provided poor mega-cap leadership for the consumer discretionary sector (-1.1%), which also faced broad pressure from rising yields and a retreat in Ulta Beauty (ULTA 471.21, -23.66, -4.78%) despite a strong earnings report of its own.

All told, the Vanguard Mega Cap Growth ETF finished 1.1% lower, with some analyst commentary suggesting that mega-cap stocks could face some profit-taking as investors look for a source of funds for SpaceX (SPCX) and other upcoming high-profile IPOs.

Outside of the mega-cap space, the financials sector (-1.2%) also lagged, with festering private credit concerns weighing on asset manager names.

Meanwhile, the energy sector (+1.4%) captured the widest gain as crude oil futures settled today's session $2.25 higher (+2.4%) at $96.08 per barrel as the state of U.S.-Iran negotiations remains muddy, with reports of fresh strikes this morning testing the limits of the already tenuous ceasefire.

The consumer staples (+0.8%) and health care (+0.7%) sectors also notched solid gains as investors sought more defensive holdings today. Outside of the S&P 500, the Russell 2000 (-1.3%) lagged amid the step back in risk sentiment and rise across yields today.

The combination of oil-driven pressure, and pronounced weakness across the market's weightiest components, proved to be too much for the major averages to extend their record streak. However, with the S&P 500 still up in nine out of the last ten sessions, and the market demonstrating a propensity to buy any dips across growth-related names, sentiment remains largely intact in the near term.

U.S. Treasuries were under selling pressure today, as rising oil prices, new tariff proposals, and some solid economic data all converged to drive the view that the Fed won't be cutting the target range for the fed funds rate anytime soon. The 2-year note yield settled up four basis points to 4.09%, and the 10-year note yield settled up four basis points to 4.49%. 

• Russell 2000: +16.6% YTD
• Nasdaq Composite: +15.5% YTD
• S&P Mid Cap 400: +13.5% YTD
• S&P 500: +10.4% YTD
• DJIA: +5.5% YTD

Reviewing today's data:

• Weekly MBA Mortgage Applications Index -2.5%; Prior -8.5%
• May ADP Employment Change 122K (Briefing.com consensus 110K); Prior was revised to 105K from 109K
• May S&P Global U.S. Services PMI - Final 50.7; Prior 50.9
• April Factory Orders 4.8% (Briefing.com consensus 3.5%); Prior was revised to 1.8% from 1.5%
  • The key takeaway from the report is that the headline numbers masked a weak month for business spending, evidenced by the 1.0% decline in nondefense capital goods orders, excluding aircraft. To be fair, that decline followed a very strong 3.8% increase in March, so it could just be a natural pullback after a large increase.
• May ISM Non-Manufacturing Index 54.5% (Briefing.com consensus 53.6%); Prior 53.6%
  • The key takeaway from the report is the understanding that activity for the country's largest business sector picked up pace in May, notwithstanding higher prices that were reflected in the highest average 12-month reading (68%) since April 2023.