(Dec 12): US equities fluctuated on Friday as megacap technology shares slumped while investors gravitated towards other corners of the stock market, including old-economy and small-cap companies.
The S&P 500 Index fell 0.1% around 9.41am in New York. The tech-heavy Nasdaq 100 Index dropped 0.5% as Broadcom Inc weighed on artificial intelligence (AI) peers after its sales outlook for the AI market failed to meet investors’ expectations. The Dow Jones Industrial Average extended its push into fresh highs.
“What a run the mega-cap growth shares have been on — impressive — but we think 2026 is the year the leadership broadens and the baton is passed,” said Robert Edwards, chief investment officer at Edwards Asset Management, in an email. “It’s time to spread the money around.”
Investors also heard from a few Federal Reserve speakers. Fed Bank of Chicago president Austan Goolsbee said he dissented against an interest-rate cut this week because he wanted to wait for more data on inflation. He’s also projecting more rate cuts for 2026 than many of his colleagues. Fed Bank of Philadelphia president Anna Paulson said she expects inflation to cool next year though she cautioned there is a risk of a further downturn in the labour market.
New Year expectations
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Since the S&P 500 clocked its previous record in late October, investors have targeted sectors beyond Big Tech as the Fed’s quarter-point cut has economists and strategists expecting the American economy to surge in the new year and drive profits higher. Talk of an AI bubble has quickly given way to optimism about US growth.
At Goldman Sachs Group Inc, strategist Ben Snider expects earnings-per-share at S&P 500 companies to jump 12% next year and 10% in 2027, helping stocks soar to fresh records as AI is more widely adopted and economic growth remains resilient. Bank of America Corp’s Michael Hartnett sees a “run-it-hot” rotation to “Main Street” micro- and mid-cap stocks from Wall Street mega-caps.
Among individual movers, Lululemon Athletica Inc shares rallied after the pricey yoga-wear maker boosted its full-year outlook and announced that its chief executive officer would step down after a period of sluggish growth.
See also: Tech stocks slide after Oracle reignites AI fears
Bristol-Myers Squibb Co climbed after Guggenheim Securities upgraded the drugmaker to buy, citing a “much more compelling risk reward”. Roblox Corp fell after JPMorgan downgraded the stock to neutral, citing headwinds around user engagement and bookings.
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