NEW YORK, Jan 7, 2026, 21:13 (EST)
- S&P 500 and Dow ended lower after hitting intraday record highs; Nasdaq eked out a gain
- Trump threat to curb corporate home buying hit landlords and financials; defense shares slid on payout warning
- Job openings fell to a 14-month low; investors turn to Friday’s payrolls report for Fed clues
U.S. stocks slipped on Wednesday, with the S&P 500 and Dow closing lower after touching record highs earlier in the session as President Donald Trump’s policy shots hit defense and housing-related shares. The Nasdaq ended slightly higher as investors returned to AI, or artificial intelligence, heavyweights including Nvidia and Alphabet. The S&P 500 fell 0.34% to 6,920.93, the Nasdaq rose 0.16% to 23,584.28 and the Dow dropped 0.94% to 48,996.08.
The retreat comes with earnings season weeks away and valuations already stretched. The S&P 500 is trading about 22 times expected earnings — a common gauge of how much investors pay for each dollar of profit — above its five-year average of 19, LSEG data show. In a Reuters Trading Day column, strategists pointed to forecasts for near 10% returns in 2026, but warned that pricey markets often lag cheaper peers.
Fresh labor data did little to settle the rate debate. Job openings — tracked in the Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS — fell 303,000 to 7.146 million at the end of November, the lowest since September 2024. “The November JOLTS estimates show a notable decline in job openings and little sign of deterioration in labor market conditions,” said Marc Giannoni, chief economist at Barclays; economists polled by Reuters expect Friday’s payrolls report to show about 60,000 new jobs in December. Reuters
Money kept flowing to the AI trade. Nvidia and Microsoft gained about 1% and Alphabet added more than 2%, even as Western Digital and Seagate gave back some of their recent surge, dropping about 9% and 6.7%, respectively. “Buy tech and forget about it” has been the playbook again, said Jake Dollarhide, chief executive of Longbow Asset Management, as Reuters reported that Claude chatbot maker Anthropic is seeking to raise $10 billion at a $350 billion valuation. Reuters
The storage rally began a day earlier after Nvidia CEO Jensen Huang, speaking at the CES trade show in Las Vegas, talked up a new storage layer; SanDisk surged more than 27% and Western Digital jumped 17%, while Seagate and Micron also hit records. “We’re going to have a very strong earnings season for Big Tech,” said Jed Ellerbroek, a portfolio manager at Argent Capital, who expects capital spending — capex — estimates to rise. Reuters
Trump’s threat to bar institutional investors from buying single-family homes hit private-equity landlords and home-related stocks. Blackstone shares slid 5.6% and American Homes 4 Rent closed down 4%, after Trump said he was taking steps to implement the ban and would ask Congress to codify it; he did not spell out what authority he would use. Blackstone said its ownership of such homes is a small slice of its business and said its current portfolio was “poised to continue to perform quite well.” Reuters
Defense contractors also came under pressure after Trump signed an executive order that would bar dividends and share buybacks — when companies repurchase their own stock — until firms can deliver “a superior product, on time and on budget.” The order directs Pentagon chief Pete Hegseth to identify underperforming contractors within 30 days and asks the SEC to consider rules to implement the proposed ban. Lockheed Martin fell 4.8% and Northrop Grumman slid 5.5% in afternoon trading. Reuters
But investors are still guessing how far and how fast the White House can push both bans, and whether Congress or courts will curb them; the Supreme Court is due to rule on the legality of Trump’s global tariffs on Friday. The December jobs report is also a hurdle: a hot number could lift Treasury yields and squeeze lofty stock valuations; a weak one could revive growth fears.
The policy surprises come after a strong 2025 run that left U.S. stocks near records; the S&P 500 ended last year up 16.4% even though it fell 0.7% on the final session, Seeking Alpha reported. A late-December Reuters markets wrap said world shares were on course for double-digit annual gains as investors weighed expected Fed rate cuts, while a Nasdaq.com/Barchart note flagged chip and data-storage weakness on the last trading day of the year.
