Late-Day Rebound Lifts Stocks to New Records Despite Early Headwinds

U.S. equities posted modest gains on Monday after shaking off early weakness, with a broad intraday reversal carrying major indices to fresh highs. The S&P 500 rose 0.2% to set another record close, while the Dow Jones Industrial Average also gained 0.2% and finished at a new closing high. The Nasdaq Composite outperformed slightly, advancing 0.3%.

Markets opened under pressure as investors digested a series of negative headlines. The most notable development came after Federal Reserve Chair Jerome Powell confirmed he is the subject of a Department of Justice criminal probe related to testimony before the Senate Banking Committee concerning renovations to Fed headquarters. The news raised fresh concerns about the Federal Reserve’s political independence, prompting some early profit-taking following Friday’s record-setting session.

That weakness proved short-lived. As the morning progressed, buyers stepped back in, and by midday the major averages had largely reclaimed positive territory. The ability of the market to absorb the news and stabilize underscored the resilience that has characterized recent trading.

Financials were a clear exception to the recovery, falling 0.8% and finishing as one of the few sectors solidly in the red. The group faced additional pressure after President Trump called for a cap on credit card interest rates at 10%, triggering sharp declines in credit card issuers and major banks. Several high-profile financial names posted steep losses, while JPMorgan Chase also traded lower ahead of its earnings release, which kicks off a busy week for large banks.

Energy was the only other sector to finish lower, slipping 0.7% despite higher oil prices. Crude futures settled up 0.8% at $59.55 per barrel, but sector sentiment was dampened by renewed political friction surrounding Venezuela and comments from Exxon’s CEO regarding the country’s investment climate.

The remaining nine S&P 500 sectors finished at or above their flatlines, led by steady recoveries in technology and strength in defensive and commodity-linked areas. Information technology rose 0.4% after rebounding from an early decline, playing a key role in lifting the broader market. Memory and storage stocks continued their strong run, extending sizable year-to-date gains, while the semiconductor group posted a solid advance despite some late-day trimming in mega-cap leaders.

Consumer staples led all sectors with a 1.4% gain, holding that leadership position throughout the session. Retail giants were among the top contributors, with investors responding positively to index-related news and continued signs of defensive sector interest. Discount retailers also rebounded after recent weakness tied to tariff-related uncertainty.

Materials gained 0.7% as gold surged to a new record high, settling up 2.5% on the day. Rising concerns around Fed independence helped fuel demand for precious metals, lifting mining stocks alongside the move in gold. Industrials rounded out the top-performing sectors, rising 0.8%, supported by strength in defense names amid ongoing geopolitical uncertainty.

Outside of large caps, small- and mid-cap stocks also moved higher. The Russell 2000 rose 0.4% and the S&P MidCap 400 added 0.2%, extending their early-year outperformance versus the major averages.

While the day’s gains were modest in magnitude, the market’s ability to reverse from early losses and close at new records highlights the underlying strength of the current trend. Investors now turn their attention to a key near-term catalyst with the release of December CPI and core CPI data. The inflation report will be closely watched, as a hotter reading could push expectations for rate cuts further into the future, while a softer outcome would likely reinforce the market’s advance to new highs.

Our FTinvest 11 model portfolio dipped slightly by 0.16%, closing at 937.63, just below its recently set all-time high of 939.15. The portfolio held up well despite the minor pullback, maintaining its strong position after a solid start to the year.

This modest decline follows last week’s breakout and reflects normal market fluctuations. FTinvest 11’s stability near record levels continues to demonstrate the strength of its value-driven framework and disciplined management as markets settle into early 2026.