U.S. stocks were mixed by midday on Thursday, with technology shares facing selling pressure as investors continued to shift funds out of the tech sector into other areas.

The Dow Jones Industrial Average rose 292.76 points, or 0.60%, to 49,288.84; the Nasdaq Composite fell 139.50 points, or 0.59%, to 23,444.78; and the S&P 500 dipped 0.45 points, or 0.01%, to 6,920.48. Among the 11 sectors of the S&P 500, the Information Technology sector was the only one to experience a significant decline, dropping approximately 2%. Market-favored AI star stock Nvidia became one of the targets for investor reduction, with its share price falling over 2%. Another AI-related concept stock, Oracle, also retreated nearly 2%, while iPhone manufacturer Apple dropped more than 1%, heading for its seventh consecutive declining session. Despite this, Rob Haworth, Senior Investment Strategy Director at U.S. Bancorp Asset Management, believes technology and artificial intelligence will remain crucial themes in 2026. He noted, however, that whether this trade can continue to be a driver of market gains will depend on whether real-world application scenarios begin to emerge and in which industries these applications appear. He stated, "We have already seen some early signs in the healthcare sector. When we think about robotics, insurance, diagnostics, and similar areas, all such companies will become early beneficiaries. We believe the real growth story lies in these places." Haworth also emphasized that market performance needs to broaden out further, specifically mentioning the Industrial and Financial sectors as two key areas to watch. He added, "The outlook for these two sectors has started to look more optimistic this year, and I believe this is crucial for the sustainability of the current rally." Defense stocks performed strongly. Defense-related shares rose on Thursday after former President Trump called for a defense budget of $1.5 trillion by 2027. Defense stocks such as Northrop Grumman, Lockheed Martin, RTX, and Kratos Defense saw widespread gains. Analysts noted that markets had largely ignored global geopolitical risks leading up to 2026, but escalating tensions at the start of the new year could test the resilience of the stock market. Anne Walsh, Chief Investment Officer at Guggenheim Partners, stated, "Geopolitical news often moves markets in a very short timeframe... but it is typically priced in quickly, after which markets revert to focusing on factors that more fundamentally drive price action, such as profits, margins, valuations, and other metrics. Ultimately, a 'buy-the-dip' mentality re-emerges, and these very limited opportunities can be used to adjust portfolios." Walsh said, "Staying diversified and being prepared is perhaps the best 'insurance,' if you will, to protect a portfolio while also positioning to seize opportunities." She stated that the fundamental backdrop for equities remains "quite good," valuations are normalizing, and the Federal Reserve is expected to cut interest rates this year. Economic data released on Thursday showed U.S. productivity surged in the third quarter, significantly lowering labor costs, while layoff levels remained low. According to the Bureau of Labor Statistics, nonfarm productivity—a measure of real output divided by hours worked—jumped 4.9% between July and September, matching expectations. However, unit labor costs—a measure of the relationship between productivity and compensation—plummeted 1.9%, far exceeding the 0.4% decline expected in a Dow Jones survey. In a separate report, the U.S. Labor Department said initial jobless claims, seasonally adjusted, were 208,000 for the week ending January 3, an increase of 8,000 from the previous week but slightly below the expected 210,000. Continuing claims, which lag by a week, increased by 56,000 to 1.91 million. Regarding Federal Reserve interest rate policy, U.S. Treasury Secretary Besant stated that the Fed can no longer delay cutting rates. Besant emphasized the current administration's desire to lower interest rates, calling rate cuts key to future economic growth. He expressed support for President Trump's economic agenda and noted that accommodative monetary policy would pave the way for future economic growth. Besant stated, "Rate cuts will have a tangible impact on the life of every Minnesotan; it is the only missing ingredient to push the economy towards stronger growth. That is why the Fed should not delay action any further." The Federal Reserve cut interest rates three times consecutively in the final four months of 2025, totaling a 75 basis point reduction, bringing the benchmark rate to a range of 3.5%–3.75%. However, the pace of rate cuts is expected to slow significantly this year: market pricing suggests only two cuts, while the latest projections from Fed officials point to just one cut. An element of uncertainty in this outlook is the appointment of a new Fed Chair this year, a process being led by Secretary Besant. Current Chair Powell's term expires in May, and the Treasury Secretary has narrowed the candidate list to five individuals. White House National Economic Council Director Kudlow and former Fed Governor Kevin Warsh are currently seen as the two leading candidates.