Nasdaq Index and S&P500: Consumer Staples and Energy Outshine Tech Stocks in Today’s Trade

Stocks Pull Back as Traders Digest Fed Signals and Trump’s Policy Pressure

U.S. stocks edged lower Thursday afternoon, giving back early-week gains as traders evaluated conflicting Federal Reserve messaging and ongoing political pressure from President Trump. The Dow Jones Industrial Average slipped 22 points, or 0.05%, to 42,149. The S&P 500 fell 0.24% to 5,966, while the Nasdaq lost 0.47% to 19,454. The cautious tone followed a midweek holiday, with markets reacting to fresh concerns about interest rate direction and geopolitical tensions in the Middle East.

Are Defensive Sectors Gaining the Upper Hand over Tech?

Though the indexes remain on track for weekly gains, sector trends show traders repositioning into defensive names. Utilities outperformed with a 1% rise, drawing in capital during heightened geopolitical risk. Consumer staples gained 0.6%, and energy added 0.47%, supported by oil prices, even as Brent crude dipped over 2% on hopes for diplomatic talks in the Iran-Israel conflict.

Communication services slid 1.32%, and tech dropped 0.49%, weighed by semiconductor jitters. Reports that Washington may pull tech waivers for chipmakers operating in China hit sentiment. Materials, consumer discretionary, and healthcare sectors also traded lower, underscoring a broad-based pullback in growth themes.

What’s Driving the Fed Uncertainty?

Market tone was shaped by mixed messaging from the Fed. Governor Christopher Waller sparked early optimism by hinting at a potential rate cut as soon as July, citing tame inflation and short-lived tariff risks. But Fed Chair Jerome Powell countered with caution, stressing a need to assess data before acting, especially with Trump’s tariff agenda adding new variables.

Trump added pressure by criticizing Powell directly, accusing him of costing the economy billions by delaying rate cuts. This political overhang complicates the Fed’s already complex decision matrix and keeps rate cut expectations in flux, limiting risk appetite for equities.

How Are Individual Stocks Reacting to Broader Uncertainty?

Earnings and M&A headlines drove stock-specific moves. Kroger surged 9.3% after raising its full-year guidance. GMS soared 28.3% after a $5 billion takeover bid from QXO, with reports suggesting Home Depot could enter the mix. On the downside, Nvidia and KLA Corporation fell as much as 2.5% amid renewed fears over chip export restrictions. Alphabet lost 2.5%, while Amazon and Meta dipped about 1%, as broader tech sentiment weakened.

What Should Traders Watch Heading Into the Close?

Markets remain resilient on the week but fragile intraday. Clarity on the Fed’s next move remains elusive, and geopolitical risks continue to hover over sentiment. Traders should monitor upcoming Fed commentary, inflation prints, and any developments out of the Middle East, especially around potential military action. With uncertainty across both monetary and geopolitical fronts, positioning may stay defensive until visibility improves.

More Information in our Economic Calendar.