U.S. equities displayed a notable divergence on Thursday as the Nasdaq Composite slid 1.3%, while an equal-weight version of the S&P 500 managed to stay in positive territory. The split underscores a market where gains are broadening beyond the largest technology names, even as those megacaps face renewed selling pressure.
At 1:05 p.m. EDT, the Invesco S&P 500 Equal Weight ETF (RSP) was up 0.01% from Wednesday's close and 0.31% from its opening price. Meanwhile, the S&P 500 itself fell 0.7% to 7,746.96, extending its loss by 0.4% from the open. The tech-heavy Nasdaq Composite stood at 27,181.01, down 1.3% from the prior close and 0.83% from its open. The Dow Jones Industrial Average slipped 0.28% to 51,037.20, while the Russell 2000 declined 0.73% to 2,772.68.
Breadth was a key theme: six of the 11 major S&P sector ETFs were trading higher on the day. Energy and consumer staples were the standout performers, with the Energy Select Sector SPDR Fund (XLE) up 2.68% and the Consumer Staples Select Sector SPDR Fund (XLP) gaining 2.08%. Financials and communication services also posted modest gains. However, technology and health care lagged, with the Technology Select Sector SPDR Fund (XLK) down 1.95%.
Liz Ann Sonders, chief investment strategist at Schwab, had warned before the open that the market's focus was on concentration rather than rotation. "This is less about rotation and more about concentration, with money crowding into a narrow set of stocks," she said. The equal-weight index's resilience offered some counterpoint, but the main benchmarks remained tethered to the fortunes of a few mega-cap tech names.
In individual movers, Exxon Mobil (XOM) rose 2.5%, Chevron (CVX) added 2.8%, and Phillips 66 (PSX) climbed 2.9%, buoyed by a surge in oil prices. Brent crude jumped 3.5% to $103.68 per barrel, while West Texas Intermediate (WTI) gained 3.2% to $91.11. The rally came amid uncertainty over the timeline for normalizing energy activity following the conflict with Iran, according to the Associated Press. Oil prices did retreat from their session highs, which coincided with a recovery in equal-weight shares, though the causal link remained unclear.
PepsiCo (PEP) was a notable gainer, rising 2.1% after reporting third-quarter net revenue growth of 5.6% and organic growth of 3.1%. The company trimmed its core constant-currency EPS growth guidance to 1%-2%, down from the prior 4%-6% range, but CEO Ramon Laguarta said planned cost cuts should help mitigate rising input cost inflation. On the downside, Nvidia (NVDA) fell 2.3%, and Taiwan Semiconductor Manufacturing (TSM) lost 3.2% despite reporting a 54.6% surge in September revenue to NT$511.86 billion. Levi Strauss (LEVI) dropped 3.5% after its results showed a 4% revenue increase and raised full-year guidance, but management noted that direct-to-consumer performance missed internal expectations.
The Treasury market also drew attention. The 30-year bond auction reopened at a yield of 5.618%, with a bid-to-cover ratio of 2.54, down from 2.61 in September. Indirect bidders took 72.3% of competitive awards, a decline from 79.5%. The 10-year Treasury yield stood at 5.258%, down 1.9 basis points from Wednesday and 6.6 basis points from its open, suggesting some relief in long-term rates.
Analyst activity reflected the market's selective tone. Piper Sandler initiated coverage of Generac Holdings (GNRC) with an Overweight rating and a $303 price target, while KeyBanc upgraded the stock to Overweight with a $280 target. Despite these bullish calls, Generac shares traded down 1.8% at 1:05 p.m., illustrating that even positive news did not guarantee gains. Mizuho downgraded Phillips 66 to Neutral with a $300 target, a move that came after the energy rally.
Looking ahead, the 4 p.m. EDT cash close will be the decisive test. Investors will be watching whether the equal-weight S&P 500 can hold its gains while the Nasdaq remains above the 27,000 level. A sustained broadening of market participation could signal a healthier rally, but the heavy reliance on energy and staples leaves the market vulnerable to a reversal if oil prices spike or if the 10-year yield climbs back above 5.33%.
