Broad Pullback Trims Gains as Investors Weigh Earnings and Geopolitical Risks

U.S. equities slipped on Thursday, giving back part of the prior session’s advance as widespread but modest selling pressure emerged across the market. The S&P 500 fell 0.3%, the Nasdaq Composite declined 0.3%, and the Dow Jones Industrial Average dropped 0.5%. Despite the pullback, the major averages remain slightly higher for the holiday-shortened week, though only marginally above unchanged levels.

Losses were broadly distributed, with eight S&P 500 sectors finishing lower, including several of the previous day’s leaders.

Financials led the declines, falling 0.9% amid weakness in asset managers. Apollo Global Management and Blackstone dropped sharply after reports that Blue Owl Capital had halted redemptions in a private retail debt fund—an assertion the company later disputed.

Technology also lagged, slipping 0.5% after outperforming in the prior session. EPAM Systems plunged following its earnings report, while Apple weighed on the sector as a mega-cap underperformer.

Consumer discretionary posted a similar decline, reflecting mixed earnings reactions. eBay rallied after results, but sharp losses in Pool Corp., Carvana, and Booking Holdings dragged the sector lower.

Energy stood out as one of the few gainers, rising 0.6% as oil prices advanced on escalating geopolitical tensions between the U.S. and Iran. Reports suggesting the possibility of military action lifted crude prices and supported energy producers.

Defense-related stocks also benefited from the heightened tensions. Huntington Ingalls Industries and Lockheed Martin posted solid gains, helping lift industrials, which rose 0.8%. The sector also received a boost from Deere & Company, which surged after delivering a strong earnings beat.

Utilities led the market with a 1.1% gain, attracting defensive flows as growth sectors cooled. However, other defensive groups did not share the same strength. Health care declined modestly, and consumer staples fell 0.4% after cautious guidance weighed on Walmart following its earnings release.

Small- and mid-cap stocks stabilized late in the session. The Russell 2000 edged up 0.2%, while the S&P MidCap 400 finished near flat after spending much of the day in negative territory.

Overall, the session reflected a more cautious tone after the prior day’s strong performance. Earnings-driven volatility and geopolitical developments dominated headlines as investors awaited the next major catalyst.

Attention now turns to the upcoming Personal Income and Outlays report, which includes the Fed’s preferred inflation measure, the PCE Price Index. Although the data pertains to December, it could influence expectations for monetary policy, particularly as recent Fed commentary has leaned more hawkish. A stronger-than-expected reading could push rate-cut expectations further into the future and shape market direction heading into the weeks ahead.

Our FTinvest 11 model portfolio declined 0.32% to close at 1,017.16, extending its recent pullback from the all-time high of 1,039.51. The portfolio continues to consolidate after a strong rally earlier in the month, with modest day-to-day fluctuations reflecting a more cautious market tone.

Despite the short-term softness, FTinvest 11 remains comfortably above the 1,000 milestone, preserving the bulk of its early-year gains. The portfolio’s value-driven discipline remains intact as it navigates this period of normalization following record-setting highs.