The S&P 500 (flat), Nasdaq Composite (-0.5%), and DJIA (+0.6%) finished mixed today as broad gains were dampened at the index level by a sharp retreat in tech. 

Nine S&P 500 sectors captured gains, with a strong rotation into cyclical sectors once again evident in today's trade. 

The energy sector (+3.2%) captured the widest gain as oil prices surged higher today, rebounding from recent slides in response to developments in Venezuela. Crude oil futures settled today's session $1.76 higher (+3.1%) at $57.75 per barrel.

The consumer discretionary sector (+1.7%) was another top performer, with a majority of its components trading higher. This morning's batch of economic data painted a solid growth picture of the economy, sending homebuilder names surging. Solid gains across names such as Lennar (LEN 109.55, +5.62, +5.41%) and D.R. Horton (DHI 145.90, +6.59, +4.73%) sent the iShares U.S. Home Construction ETF 4.2% higher. 

The sector also benefitted from solid mega-cap leadership from Amazon (AMZN 246.29, +4.73, +1.96%) and Tesla (TSLA 435.80, +4.40, +1.02%).

With that being said, one might find it surprising that the Vanguard Mega Cap Growth ETF (-0.8%) actually faced a considerable retreat today. However, the weakness was almost entirely confined to the information technology sector (-1.5%), with NVIDIA (NVDA 185.00, -4.11, -2.17%) today's "magnificent seven" laggard. 

The PHLX Semiconductor Index (-1.8%) faced its second consecutive day of losses after a strong start to the week, with memory storage names such as Sandisk (SNDK 334.54, -19.02, -5.38%) and Western Digital (WDC 187.68, -12.20, -6.10%) among the worst performers. 

The health care sector (-0.9%) was the only other S&P 500 sector to finish with a loss, once again facing pressure in pharmaceutical and biotech names. 

Meanwhile, the consumer staples sector (+2.3%) finally saw some action after a negative start to the year.  Constellation Brands (STZ 147.98, +7.49, +5.33%) captured the widest gain after beating top-and-bottom-line expectations, while Costco (COST 915.31, +32.73, +3.71%) traded nicely higher after reporting strong December adjusted comparable sales growth of 6.2%. 

Defense names also captured solid gains in today's action, with Huntington Ingalls (HII 378.30, +21.85, +6.13%) and L3Harris (LHX 325.81, +16.05, +5.18%) among the outperformers in the industrials (+0.7%) sector. The move came after President Trump called for a 66% increase in the military budget to $1.5 trillion in 2027. 

Outside of the S&P 500, the Russell 2000 (+1.1%) and S&P Mid Cap 400 (+0.4%) returned to the winners' circle after a retreat yesterday, padding their year-to-date gains that give them an early lead over the major averages. 

All told, today's action reflected a broadening of leadership as early indicators point to a strong economy in 2026, with cyclical and small-cap stocks poised to benefit. Attention now turns to a busy Friday of economic data that includes the December Employment Situation Report, along with an expected ruling from the Supreme Court on the legality of President Trump's sweeping IEEPA tariffs.

U.S. Treasuries retreated on Thursday, giving back their midweek gains, with the 10-year note leading the way. The 2-year note yield settled up two basis points to 3.49%, and the 10-year note yield settled up five basis points to 4.18%. 

• Russell 2000: +4.9% YTD
• S&P Mid Cap 400: +3.8% YTD
• DJIA: +2.5% YTD
• S&P 500: +1.1% YTD
• Nasdaq Composite: +1.0% YTD

Reviewing today's data:

• Weekly Initial Claims 208K (Briefing.com consensus 217K); Prior was revised to 200K from 199K, Weekly Continuing Claims 1.914 mln; Prior was revised to 1.858 mln from 1.866 mln
  • The key takeaway from the report is that initial claims are quite low to support a view that consumer spending should hold up; however, continuing claims remain high enough to support a view that the Fed will worry enough about a softening in the labor market (i.e., weak hiring activity) such that it remains inclined to pursue easier monetary policy.
• Q3 Productivity-Prel 4.9% (Briefing.com consensus 2.5%); Prior was revised to 4.1% from 3.3%, Q3 Unit Labor Costs-Prel -1.9% (Briefing.com consensus 0.8%); Prior was revised to -2.9% from 1.0%
  • The key takeaway from the report is that it is the golden ticket for the economy (and the Fed, per chance), as it reflects strong growth without labor cost inflation.
• October Trade Balance -$29.4 bln (Briefing.com consensus -$61.3 bln); Prior was revised to -$48.1 bln from -$59.6 bln
  • The key takeaway from the report is that the headline deficit number is the lowest since June 2009. A residual takeaway is that the improvement clearly has something to do with the introduction of higher tariff rates that have detracted from import demand.
• October Wholesale Inventories 0.2% (Briefing.com consensus 0.2%); Prior 0.5%
• Consumer credit increased by $4.2 billion in November (Briefing.com consensus: $10.3 billion) following an unrevised $9.2 billion increase in October.