S&P500: US Indices Dip Premarket but Defense Stocks Soar on Trump Budget Proposal

Profit-Taking and Position-Squaring Drive Early Losses

U.S. stock futures are lower on Thursday shortly before the cash market opening as investors book profits following this week’s rally to record highs in the Dow and S&P 500. Position-squaring ahead of Friday’s Non-Farm Payrolls report is contributing to the early selling pressure along with weakness in crude oil and gold, which could be weighing on the energy and materials sectors.

Futures Point to Lower Open Across Major Indices

At 12:14 GMT, Dow Jones Industrial Average futures are trading 49044.00, down 195.00 or -0.40%. S&P 500 Index futures are at 6945.50, down 17.75 or -0.25% and Nasdaq-100 futures are trading 25749.75, down 89.00 or -0.34%.

Defense Stocks Surge on Trump’s $1.5 Trillion Military Budget Proposal

Bucking the early trend are defense stocks, which are surging in the premarket after President Trump called for a $1.5 trillion military budget in 2027. Trump wrote on Truth Social that the move, “will allow us to build the ‘Dream Military’ that we have long been entitled to, and, more importantly that will keep us SAFE and SECURE, regardless of foe.”

Northrop Grumman gained 8.84% in premarket trade on Thursday, Lockheed Martin was last seen 7.98% higher, RTX advanced 5.33%, and Kratos Defense was up 11.20%.

The rally in defense stocks represents a complete about-face from Wednesday’s trade, which saw the shares of companies plunge more than 3% after Trump said he “will not permit” defense companies to issue dividends or stock buybacks until those firms address his complaints about the industry.

Energy Stocks Rebound After Venezuela Oil Deal Volatility

Stock traders are also eyeing the crude oil and gold markets after recent volatile moves in the two major commodities. Crude oil is rebounding early Thursday after a steep break the previous session on President Trump’s comments that Venezuela will be turning over as much as 50 million barrels of oil to the U.S., driving concerns over increasing oil supply. In the pre-market trade, Exxon Mobil is up 0.33%, Chevron is 0.66% higher and Halliburton is up 1.00%.

Gold Miners Pressured by Rebalancing Concerns

Newmont Corporation is down 2.39% after yesterday’s plunge in gold and expectations of further downside risk due to an annual rebalancing of two major commodity indexes between January 9 and January 15. Gold traders are bracing for futures contract liquidation of roughly $6.8 billion, according to Citigroup.

Technical Outlook: S&P 500 Tests Key Support Levels

Technically, March E-mini S&P 500 Index futures are under pressure after hitting a high at 7006.75, just shy of the contract high at 7014.00. Increased selling pressure today could drive the benchmark index into the uptrend line that has been controlling the rally since November 21. Today the trend line comes in at 6907.50. If the trend line is broken convincingly, prices can continue lower into the 50-day moving average at 6885.00.

Look for buyers on the first test of the trend line and the 50-day MA. A failure at both support levels could create the downside momentum needed to challenge the swing bottom at 6866.75. This is also a potential trigger point for an acceleration to the downside.

More Information in our Economic Calendar.