Stocks Stall After Early Records as Mega-Cap Weakness Drags Nasdaq Lower

The stock market flirted with new highs today, but the rally lost steam in the afternoon as pressure in mega-cap and tech names kept the Nasdaq Composite from finishing in record territory. The S&P 500 ended the day essentially flat, the Nasdaq slipped 0.3%, and the Dow Jones Industrial Average gained 0.5%, with each index touching fresh intraday records earlier in the session.

Despite the late-day weakness, there was still evidence of broad underlying strength. Seven of the eleven S&P 500 sectors closed higher, with utilities and health care leading the way. Utilities rose 1.2%, supported by strength across nearly the entire group, while health care added 1.1% and extended its run as the week’s top-performing sector. Managed care stocks once again drove the move, led by Humana, which soared more than 10% following its upbeat Medicare Advantage Star Ratings update and reaffirmed guidance. The sector finished the week up nearly 7%.

On the flip side, consumer discretionary and communication services lagged, both weighed down by declines in their mega-cap leaders. That pullback contributed to a 0.4% decline in the Vanguard Mega Cap Growth ETF, underscoring how dependent the broader market remains on its largest components. The information technology sector, which had traded higher most of the morning, also slipped 0.3% by the close, dragging the S&P 500 back to its flatline.

Individual names played a role in the retreat. Palantir sank more than 7% after reports that the U.S. Army flagged security flaws in one of its defense systems, while NVIDIA saw modest profit-taking after a week of record-setting gains.

Outside the mega-cap space, smaller stocks fared better. The Russell 2000 rose 0.7%, and the S&P Mid Cap 400 added 0.3%, signaling a bit of rotation into less-crowded corners of the market.

Investors also continued to monitor the political backdrop, with the government shutdown stretching on and delaying the release of key economic reports, including today’s Employment Situation data. Even so, rate cut expectations remained intact, anchored by this week’s weaker-than-expected ADP payrolls report. Fed commentary was mixed—Vice Chair Phillip Jefferson stressed the dual challenges of inflation and employment, while Chicago Fed President Austan Goolsbee warned against moving too quickly on cuts.

Overall, while the indices closed shy of their highs, today’s expansion into record levels showed that markets remain resilient, balancing sector rotation, macro uncertainty, and policy expectations with a steady appetite for equities.

Our FTInvest 11 model portfolio ended the week on a stronger note, rising 1.05% on Friday to close at 860.02, marking its highest close in two weeks. That late push helped the index turn in a 0.42% gain for the week, though it lagged behind the S&P 500’s more robust 1.09% advance.

The market’s tone during the week was shaped by a mix of cautious optimism and selective strength in portfolio components. FTInvest 11 managed to grind higher despite periods of volatility, underscoring the index’s resilience. Friday’s decisive move higher was critical in offsetting midweek weakness and securing a modest gain.

Year to date, FTInvest 11 continues to run ahead of the broader market, up 18.11% versus the S&P 500’s 14.18%. This relative outperformance highlights the portfolio’s ability to benefit from some names while maintaining a measure of balance that has supported stability through uneven trading sessions.

The week’s performance underscores both the opportunities and challenges in the current environment. While mega-cap leadership drove the S&P 500 to new highs, FTInvest 11’s broader mix left it trailing slightly in the short term. Still, its stronger year-to-date gains remain a sign of structural strength heading into the final stretch of the year.