Stocks Slip as Oil Rebounds and Mega-Cap Weakness Caps Gains

U.S. equities closed modestly lower as investors navigated a complex mix of geopolitical headlines, rising Treasury yields, and a rebound in oil prices. The S&P 500 declined 0.4%, the Nasdaq Composite lost 0.8%, and the Dow Jones Industrial Average edged down 0.2%, with weakness in mega-cap stocks offsetting otherwise constructive breadth.

Despite early selling pressure, the broader market showed resilience throughout the session, with many stocks recovering from morning lows. However, the inability of the major indices to sustain moves above flatline levels reflected ongoing fragility in sentiment—particularly as leadership in mega-cap tech continues to falter.

Developments surrounding the Iran conflict remained inconclusive. Iran reiterated that it is not engaged in ceasefire negotiations with the U.S., while reports suggested Gulf states are backing tougher measures against Tehran. At the same time, Axios indicated that indirect communication channels between the U.S. and Iran remain open, with Washington awaiting a response on potential peace talks. President Trump added to the mixed messaging, stating that both sides are interested in reaching a deal.

Oil prices responded to the uncertainty by reversing part of yesterday’s sharp decline. Crude settled 4.7% higher at $92.29 per barrel, providing a tailwind for energy stocks. The energy sector rose 2.1%, finishing as the top performer on the day.

The materials sector also stood out, gaining 1.7% as chemical and fertilizer names advanced amid continued volatility near the Strait of Hormuz. CF Industries and Mosaic were among the strongest performers, benefiting from supply disruption concerns.

Defensive sectors offered modest support. Utilities gained 0.7%, while consumer staples briefly showed stronger momentum before fading into a marginal 0.1% advance. Estee Lauder was a notable laggard within the staples space after confirming discussions around a potential business combination with Spain’s Puig.

On the downside, communication services led sector losses, falling 2.5% as mega-cap weakness weighed heavily. Alphabet declined more than 3%, while Meta Platforms also finished in negative territory.

The technology sector (-0.7%) faced renewed pressure, particularly in software. Microsoft was a key drag, and the iShares GS Software ETF dropped 4.2%, reflecting persistent concerns around growth and valuation in the space.

That said, semiconductors provided a partial offset. The PHLX Semiconductor Index gained 1.3%, supported by strength in hardware and optical component names such as Lumentum, Corning, and Dell.

Market internals painted a more constructive picture than the headline indices suggest. The S&P 500 Equal Weighted Index rose 0.1%, outperforming the market-cap-weighted benchmark, while the Russell 2000 and S&P MidCap 400 gained 0.5% and 0.8%, respectively.

In sum, the session highlighted a market that is holding up beneath the surface but remains constrained by weakness in its largest components. With oil prices rising again and geopolitical uncertainty unresolved, the major indices continue to struggle below their 200-day moving averages, signaling a cautious tone as investors await clearer direction.

Our FTInvest 11 model portfolio gained 0.77% to close at 945.65, extending its rebound following last week’s sharp correction. The portfolio continues to recover from recent lows, though it remains below the all-time high of 1,039.51.

The continued upside momentum suggests improving sentiment after the portfolio briefly entered correction territory. Importantly, FTInvest 11 is now back to +1.88% year-to-date, reflecting a solid recovery and renewed relative strength. The portfolio’s disciplined, value-driven strategy remains a key factor in navigating ongoing market volatility.