Mega-Cap Weakness Drags Market Lower After Early Records

The stock market gave back early gains on Tuesday, with the S&P 500 (-0.6%), Nasdaq Composite (-1.0%), and DJIA (-0.2%) all closing in negative territory as pressure mounted on the market’s largest names.

The session began on a strong note, with both the S&P 500 and Dow Jones Industrial Average touching fresh intraday records. The S&P 500 even came within half a point of breaking through the 6,700 level. But momentum faded as mega-cap leaders lost steam, reversing much of yesterday’s record-setting strength.

NVIDIA (NVDA 178.43, -5.18, -2.82%), which had soared on news of a planned $100 billion investment in OpenAI to deploy massive AI infrastructure, was at the center of today’s retreat. CNBC reports fueled skepticism, with some investors flagging the arrangement as resembling vendor financing and others questioning whether 10 gigawatts of capacity could realistically be delivered given current energy and policy constraints. Oracle (ORCL 314.05, -14.10, -4.30%) also slipped, erasing much of yesterday’s rally and dragging the broader technology sector down 1.1%.

The consumer discretionary sector (-1.4%) fared even worse, with Amazon (AMZN 220.71, -6.92, -3.04%) and Tesla (TSLA 425.85, -8.36, -1.93%) leading declines. That left the Vanguard Mega Cap Growth ETF off 1.1% on the day, while the equal-weighted S&P 500 managed to eke out a 0.1% gain, underscoring the concentrated weakness in the largest stocks.

Smaller caps held up relatively better, though they too lost ground as the broader market rolled over. The Russell 2000 slipped 0.3% and the S&P Mid Cap 400 ended just 0.1% lower. Among the day’s winners, the energy sector (+1.7%) stood out, supported by crude oil’s 1.9% climb to $63.44 per barrel.

Comments from Fed Chair Jerome Powell also caught market attention. While largely echoing last week’s FOMC messaging, Powell noted that “by many measures, for example, equity prices are fairly highly valued.” His acknowledgment of stretched valuations may have added weight to the late-session pullback, particularly in the overheated mega-cap space.

Ultimately, Tuesday’s setback followed an extraordinary rally, suggesting investors are pausing to assess both valuations and the sustainability of record-setting momentum. Yet with dip-buying having been a persistent theme of this market, the bigger question may be how quickly today’s pullback invites fresh inflows.

Our FTinvest 11 model portfolio managed to return to its run, overcoming early hesitation to close at 863.72, a gain of 0.23% for the day.

The index spent much of the session trading without clear direction, but steady buying interest late in the afternoon allowed it to secure yet another all-time high close. The move was modest in percentage terms, but it added to the broader pattern of resilience that has defined recent trading.

With today’s advance, FTinvest 11 continues to consolidate above the 860 mark, reinforcing the view that market participants remain confident even as the rally shows signs of slowing. While gains were limited, the ability to notch a fresh record level underscored the strength of the index’s underlying momentum.