Growth and Mega-Cap Weakness Pulls Stocks Lower

U.S. equities struggled on Thursday as renewed pressure on growth and mega-cap stocks led to a broad market retreat. The S&P 500 fell 1.1%, the Nasdaq Composite dropped 2.0%, and the Dow Jones Industrial Average slipped 0.5%, with profit-taking and valuation concerns weighing heavily across much of the market.

Today’s action echoed Tuesday’s selling, when the post-earnings reaction to Palantir Technologies triggered a wave of selling in high-growth names. While the losses were not as steep this time, they were similarly concentrated in the most speculative corners of the market. The Vanguard Mega-Cap Growth ETF and Russell 3000 Growth Index both dropped around 1.7%, underscoring the persistent weakness among large-cap growth leaders.

Disappointing earnings results and guidance from several high-profile companies added fuel to the decline. e.l.f. Beauty, Duolingo, DoorDash, and Paycom Software all plunged double digits after issuing results that failed to meet lofty expectations. Meanwhile, CarMax warned of a soft third quarter and announced the resignation of its CEO, sparking a sharp sell-off in the stock and dampening investor sentiment.

Selling pressure also spread to the mega-cap names that have dominated this year’s rally. Tesla, NVIDIA, Meta Platforms, Amazon, and Microsoft all declined between 2% and 4%, dragging on the broader indices. Alphabet was the lone exception, inching higher after reports that Google plans to make its proprietary AI chip, Ironwood, broadly available—news that in turn weighed on NVIDIA.

Breadth was decisively negative: decliners outnumbered advancers by roughly 9-to-5 on the NYSE and more than 2-to-1 on the Nasdaq. Only two S&P 500 sectors managed to end in positive territory—energy (+0.9%) and health care (+0.2%). The latter benefited from President Trump’s announcement that Eli Lilly and Novo Nordisk will adopt “most-favored nation” pricing for their popular weight-loss drugs.

At the bottom of the leaderboard, the consumer discretionary (-2.5%) and information technology (-2.2%) sectors led losses, followed by modest declines across most other groups.

With the federal government still in shutdown mode, there were no official economic releases today. However, a private report from Challenger, Gray & Christmas showed that U.S. job cuts in October totaled 153,074, marking the highest October total since 2003—a reminder that the labor market may be softening just as corporate earnings momentum begins to cool.

Overall, the session reflected a familiar pattern of elevated volatility in growth stocks, with stretched valuations leaving little room for disappointment. Investors rotated cautiously toward defensive sectors, but for now, the market’s heavy reliance on mega-cap leadership remains a key vulnerability heading into next week.

Our FTinvest 11 model portfolio managed to edge higher, closing up 0.15% at 854.98, despite spending much of the morning in negative territory. The index showed resilience as late-session buying offset early weakness that had mirrored a cautious tone in the broader market.

Early in the session, pressure across several growth-oriented holdings kept the index subdued, with sentiment weighed by lingering valuation concerns and a softer open for U.S. equities overall. However, the tone improved into the afternoon as investors stepped back into select outperformers, particularly one name tied to earnings momentum.

Overall, today’s rebound underscores the portfolio’s ability to stabilize following dips—supported by its balanced exposure to both growth and value drivers—and positions FTInvest 11 to test higher levels should market sentiment continue to improve next week.