Stocks Retreat From Record Highs as Oil Rebounds and Cyclical Sectors Fade

Wall Street pulled back from fresh record territory as a rebound in oil prices and broad-based profit-taking pressured equities throughout the afternoon. The S&P 500 slipped 0.4%, while the Nasdaq Composite edged 0.1% lower after both indices reached new all-time highs earlier in the session. The Dow Jones Industrial Average underperformed with a 0.6% decline.

Despite the softer finish, mega-cap technology names and strong software earnings initially helped keep the broader market resilient. The information technology sector managed to close modestly higher, although it surrendered most of its earlier gains as the session progressed.

Software stocks remained a standout area of strength after another strong wave of earnings reports. Datadog surged more than 31%, while Fortinet jumped 20%, making them the best-performing components in the S&P 500. Their rallies helped lift the iShares Expanded Tech-Software Sector ETF 3.6% higher.

In contrast, semiconductor stocks experienced notable profit-taking after Wednesday’s powerful rally. The PHLX Semiconductor Index fell 2.7%, though selective strength among AI leaders helped cushion the decline. NVIDIA and Microsoft both posted gains, helping stabilize the technology sector late in the session.

Relative resilience among other “Magnificent Seven” names also supported the communication services sector, which finished slightly positive, while losses in the consumer discretionary sector remained relatively contained.

Oil prices once again played a central role in market sentiment. Crude traded sharply lower during the morning amid optimism surrounding ongoing U.S.-Iran negotiations, but prices rebounded midday after reports suggested negotiations remain difficult. According to The Wall Street Journal, a senior Iranian official stated that Tehran would not accept what it described as an “unrealistic” U.S. proposal regarding the reopening of the Strait of Hormuz.

Crude oil futures ultimately settled modestly lower at $94.89 per barrel, but the intraday rebound was enough to pressure equities and dampen broader participation.

The energy sector still finished among the market’s weakest groups, falling 1.8%, while the materials sector and industrials sector posted comparable losses.

Industrials were weighed down by profit-taking in Caterpillar and weakness across electrical equipment names, while materials stocks struggled as recent earnings winners such as DuPont and International Flavors & Fragrances pulled back sharply.

Outside the software space, earnings reactions were more mixed and lacked the broader market impact seen earlier in the week. McDonald’s, Arm Holdings, and DoorDash were among the more closely watched names reporting results, though none materially shifted the market narrative.

Smaller-cap stocks faced steeper declines as risk appetite cooled beneath the surface. The Russell 2000 fell 1.6%, while the S&P MidCap 400 lost 1.2%, reflecting broader weakness outside the mega-cap technology complex.

Overall, the session represented a modest pause after the market’s recent run to record highs. Strong software earnings and continued resilience among mega-cap leaders helped limit downside pressure, but rising oil prices and profit-taking across cyclical sectors weighed on broader participation as investors remained focused on geopolitical developments and the trajectory of energy markets.

Our FTinvest 11 model portfolio slipped 0.22% to close at 1,038.96, easing slightly after setting a new all-time high in the previous session. Despite the modest pullback, the portfolio remains very close to its record high of 1,041.22, reflecting continued strength following the recent breakout.

FTinvest 11 is now up approximately +11.94% year-to-date, maintaining strong double-digit gains in 2026. The minor decline reflects normal consolidation after a move to fresh highs, while the portfolio’s disciplined, value-driven strategy continues to support its long-term momentum.