Stock Market Update

[BRIEFING.COM] The stock market's mega-cap rally finally stalled today, sending the S&P 500 (-1.0%), Nasdaq Composite (-1.6%), and DJIA (-0.2%) lower and snapping this week's perfect streak of fresh record highs.

Meta Platforms (META 666.47, -85.20, -11.33%) was the focal point of weakness after its earnings report yesterday, in which it comfortably bested expectations but saw a substantial $15.9 billion non-cash income tax charge weigh on GAAP EPS and the stock post-earnings.

Perhaps more importantly, the company raised its FY25 spending plans and warned of even heftier AI spending next year, prompting concerns around the profitability, or more specifically, the timeline to profitability of massive AI expenditure. 

That same sentiment did not seem to weigh on Alphabet (GOOG 281.90, +6.73, +2.45%), which traded higher after crushing Q3 earnings expectations.

The company also raised its FY25 capex guidance and expectations for even higher spending in 2026. Investors seemed less worried by Alphabet's spending spree, as Google Cloud revenue jumped 34% to $15.2 billion, with backlog up 46% to $155 billion as AI services drove growth. Management noted more billion-dollar deals in the first nine months of 2025 than the previous two years combined.

Torn between Meta's weakness and Alphabet's strength, the communication services sector (-2.1%) ultimately finished lower. 

Microsoft (MSFT 525.78, -15.77, -2.91%) also moved lower despite an earnings beat of its own, though the company issued just in-line Q2 guidance and reported a smaller upside surprise in Azure revenues than previous quarters.

Elsewhere, the consumer discretionary sector (-2.6%) finished with the widest loss as Tesla's (TSLA 440.10, -21.41, -4.64%) slide pushed it to negative territory for the month, while Amazon (AMZN 222.86, -7.44, -3.23%) traded lower ahead of its earnings this afternoon. The sector faced additional pressure from post-earnings weakness in Chipotle Mexican Grill (CMG 32.52, -7.24, -18.22%) and eBay (EBAY 83.73, -15.81, -15.88%).

Apple (AAPL 271.40, +1.70, +0.63%) also reports this afternoon, though it consistently held a modest gain throughout the session, helping to limit losses in the information technology sector (-1.4%), which moved lower with Microsoft and other top components. NVIDIA (NVDA 202.81, -4.23, -2.04%) was among those names, pulling back from recent record highs and contributing to a 1.5% loss in the PHLX Semiconductor Index. 

The Vanguard Mega Cap Growth ETF (-1.5%) finished with a similar loss, and the S&P 500 Equal Weighted Index (-0.4%) outperformed the market-weighted S&P 500 (-1.0%). 

While the mega-caps lagged from the start, other recently overlooked pockets of the market held considerable gains throughout the day as investors rotated out of tech. The DJIA (-0.2%) held a nice gain for most of the day, nearly eclipsing yesterday's all-time high level before a broader retreat ensued late in the session. 

Three S&P 500 sectors still managed to finish higher, all of which faced significant losses in yesterday's trade. 

The real estate sector (+0.6%) finally caught some buying interest, though the sector still holds a 4.0% loss for the week, while the financials sector (+0.3%) was supported by strength in its major banking names after weakness across the board yesterday. 

The health care sector (+0.2%) also escaped with a gain, supported by its largest component, Eli Lilly (LLY 844.79, +31.26, +3.84%), after an earnings beat, while Moderna (MRNA 28.14, +3.44, +13.93%) made a significant intraday move following speculation of a buyout. Dow component Merck (MRK 86.26, -0.32, -0.37%) faced a modest loss despite beating earnings estimates. 

Outside of the S&P 500, the small-cap Russell 2000 (-0.8%) and S&P Mid Cap 400 (-1.0%) widened their losses that came after Fed Chair Powell's commentary reduced the market's expectations of a December rate cut. 

Despite the stock market retreating today as its largest names lagged, it was not a complete washout trade by any means. After a several-day rally past record highs, the mega-caps were due for a pullback, with any hint of weakness in earnings reports used as a reason to take some money off of the table.

U.S. Treasuries retreated on Thursday, adding to their post-FOMC losses, with longer tenors leading the weakness. The 2-year note yield settled up three basis points to 3.61%, and the 10-year note yield settled up four basis points to 4.09%.

• Nasdaq Composite: +22.1% YTD
• S&P 500: +16.0% YTD
• DJIA: +11.7% YTD
• Russell 2000: +10.6% YTD
• S&P Mid Cap 400: +3.4% YTD