S&P 500 Slides as Tech Rotation Accelerates Into Cyclicals

The S&P 500 turned lower as investors continued rotating out of mega-cap technology leaders, even while smaller-cap and value shares outperformed. Heavyweights such as Apple, Meta and Microsoft weighed on broader US benchmarks, contrasting with strength in cyclicals. Oil prices eased from recent highs on easing geopolitical tensions, while gold retreated from record levels as safe-haven demand cooled. European equities looked set to extend record gains, supported by the same broadening market leadership.

Equities

The FTSE 100 closed at a record high on Wednesday, ending the session up 0.46% after steady gains through the afternoon. Mining and healthcare stocks provided the main support, helping the index finish above 10,180 points. The FTSE 250, which is more closely tied to the domestic economy, ended the day little changed, reflecting a more mixed picture away from large-cap stocks.

Mining shares were among the strongest performers. Rio Tinto closed around 2.3% higher on Wednesday, while Glencore ended the session up roughly 3%. Both stocks tracked higher copper prices, which pushed to a new peak during the day. The broader mining sector also benefited, with investors favouring companies exposed to industrial metals rather than domestic growth.

Healthcare stocks also lifted the market. AstraZeneca shares closed 2.4% higher after the company agreed to buy Boston-based Modella AI. The deal underlined AstraZeneca’s push to use artificial intelligence to speed up drug discovery and supported the wider pharmaceutical sector during the session.

Losses elsewhere capped broader gains. Pearson fell 9.5% by the close, making it the weakest performer on the FTSE 100. The education publisher said its Assessment & Qualifications division had lost a major contract in New Jersey, which is expected to weigh on performance in the first half of 2026. On the FTSE 250, housebuilder Vistry dropped nearly 9% after warning that forward sales had weakened and annual home completions were lower.

In the United States, stock markets ended lower on Wednesday, led by a sharp decline in the Nasdaq Composite, which closed down 1%. Technology shares were under pressure throughout the session, pulling the index down despite strength in some defensive areas.

The S&P 500 finished about 0.5% lower, while the Dow Jones Industrial Average slipped slightly by the close. Financial stocks were a major drag. Wells Fargo shares ended the day 4.6% lower after the bank missed fourth-quarter profit expectations. Citigroup and Bank of America also closed lower, despite both reporting profits that beat Wall Street forecasts.

Technology stocks added further pressure. Broadcom and Fortinet both fell late in the session after a Reuters report said Chinese authorities had told domestic companies to stop using cybersecurity software from several US firms. Energy stocks moved higher earlier in the day as oil prices rose on supply concerns, though crude prices eased back before markets closed.

Forex & Commodities

In Asia, the Japanese yen steadied after recent weakness, trading at 158.6 per dollar after firming the previous day. The move followed renewed verbal warnings from Japanese officials ahead of a snap election, with Finance Minister Satsuki Katayama again cautioning against one-sided currency moves. The yen remained close to an 18-month low near 159.5 reached on Wednesday, reflecting continued concern about Prime Minister Sanae Takaichi’s spending plans and the decision to dissolve parliament and call an early vote. Markets are watching closely for any follow-up action, with the Bank of Japan due to meet next week and widely expected to leave interest rates unchanged after raising them last month.

The US dollar was little changed in early Thursday trading, holding near 99.13 on the dollar index after touching a one-month high on Wednesday. The greenback had dipped earlier in the week following comments from Jerome Powell pushing back against political pressure, before recovering as traders took the situation in stride. Sterling edged lower overnight, easing to 1.363 against the dollar, while the euro was steady around 1.164. Recent US data showing firm retail sales and producer prices in line with forecasts reinforced expectations that the Federal Reserve will keep rates on hold at its January meeting, with markets still pricing in rate cuts later in the year.

Gold prices slipped early on Thursday after reaching a record high in the previous session. Spot gold was lower at 4,609 dollars an ounce after peaking near 4,643 on Wednesday, as some investors booked profits. Comments from President Donald Trump signalling a more cautious stance on Iran and saying he had no plans to fire Powell reduced immediate demand for safe-haven assets. Other precious metals also moved lower, with silver retreating after hitting a record earlier in the session.

Oil prices fell sharply on Thursday morning, giving back much of Wednesday’s gains. Brent crude traded down at 64.31 dollars a barrel, while US crude slipped to 59.97 dollars, after Trump said killings linked to protests in Iran were easing. The pullback was reinforced by US inventory data showing a larger-than-expected rise in crude and gasoline stocks, alongside reports that Venezuela had resumed oil exports.