[BRIEFING.COM] The S&P 500 (-0.2%), Nasdaq Composite (-0.6%), and DJIA (-0.1%) retreated from modest gains this morning amid another weak session for the information technology sector (-1.0%), with losses across mega-cap tech names weighing the major averages down despite strength in the broader market. 

Notably, Broadcom (AVGO 339.86, -20.07, -5.58%) and Oracle (ORCL 184.82, -5.15, -2.71%) continued their post-earnings slide, which prompted a pullback in the AI trade last week.

Apple (AAPL 274.20, -4.08, -1.47%) and Microsoft (MSFT 474.75, -3.78, -0.79%) were among the mega-caps that faced pressure, though NVIDIA (NVDA 176.12, +1.10, +0.63%) captured a nice gain. 

Separately, ServiceNow (NOW 764.67, -100.39, -11.60%) posted the widest loss in the sector (and the S&P 500), trading lower after Bloomberg reported that the company is looking to acquire Armis for approximately $7 billion. The stock was downgraded to Underweight from Sector Weight with a $775 target at KeyBanc.

Elsewhere, the communication services sector (-0.2%) finished with a more modest loss, though it too was a result of mega-cap weakness. Alphabet (GOOG 309.30, -1.22, -0.39%) faced a slight retreat, though headlines surrounding the company spurred much more significant losses elsewhere. Aim Group reported that the company is looking to test real estate listings by including them directly in search results, a prospect that weighed heavily on real estate listing stocks such as Zillow (ZG 66.67, -5.71, -7.89%) and CoStar Group (CSGP 63.73, -4.50, -6.60%).

The energy sector (-0.8%) also closed with a loss as crude oil futures settled today's session $0.64 lower (-1.1%) at $56.82 per barrel. 

While weakness in tech prevented gains at the index level, the broader market found support through continued rotation into other areas.

Defensive sectors such as the health care (+1.3%), utilities (+0.9%), and consumer staples (+0.3%) sectors notched gains as the AI trade widened its pullback. 

The health care sector captured the widest gain today as a majority of its components traded higher. Bristol-Myers (BMY 54.30, +1.88, +3.60%) advanced the furthest after Bank of America Securities upgraded the stock to Buy from Neutral, with a price target of $61. The sector's largest component, Eli Lilly (LLY 1062.71, +35.20, +3.43%), captured a similar gain, extending last week's bounce off its lowest level since early November. 

A handful of cyclical sectors also managed to capture gains, with the consumer discretionary sector (+0.5%) a relative standout. 

Tesla (TSLA 475.12, +16.16, +3.52%) was a rare point of strength across mega-cap names, trading higher after reports that the company is now testing its robotaxi service in Austin, Texas, without the use of a human safety driver. 

The sector was also supported by a particularly strong day for stocks across the travel industry, including cruise lines such as Carnival (CCL 28.59, +0.97, +3.51%), hotels such as Marriott (MAR 308.52, +9.80, +3.28%), and travel services companies such as Expedia Group (EXPE 283.42, +9.21, +3.36%). 

All told, strength in the broader market saw the S&P 500 Equal Weighted Index (+0.1%) scratch out a slight gain and outperform the market-weighted S&P 500. Unlike recent sessions, however, smaller-cap stocks did not benefit from the rotational action today, as the Russell 2000 (-0.8%) and S&P Mid Cap 400 (-0.3%) both closed lower. 

On the policy front, President Trump has stated that his search for the next Fed Chairman nominee is down to National Economic Director Kevin Hassett and former Fed Governor Kevin Warsh. Mr. Hassett had been viewed as the frontrunner in recent weeks but has faced criticism over concerns that he may lack independence from President Trump.

Fed commentary echoed many of the sentiments from last week's FOMC meeting. New York Fed President John Williams (voting FOMC member) said that he expects inflation to decrease and GDP to increase over the next year, remarking that "the economy is poised to return to solid growth and price stability."

Meanwhile, Fed Governor Stephen Miran (voting FOMC member) reiterated his stance that a quicker pace of policy easing is needed to prevent further weakness in the labor market. 

Looking ahead, the market will be particularly attuned to tomorrow's release of the November Employment Situation Report, especially considering Fed Chair Powell stated at last Wednesday's FOMC meeting that there is a possibility that recent employment reports have overstated recent hiring figures. 

U.S. Treasuries began the week on a positive note, though intraday action saw a pullback from morning highs. The 2-year note yield settled down two basis points to 3.51%, and the 10-year note yield settled down one basis point to 4.18%. 

• Nasdaq Composite: +19.4% YTD
• S&P 500: +15.9% YTD
• DJIA: +13.8% YTD
• Russell 2000: +13.5% YTD
• S&P Mid Cap 400: +19.4% YTD

Reviewing today's data: 

• The Empire State Manufacturing Survey fell to -3.9 in December (Briefing.com consensus 10.6) from 18.7 in November.
• The NAHB Housing Market Index rose to 39 in December (Briefing.com consensus 39) from 38 in November.