By Megan Leonhardt

A Defensive Posture. It was a challenging day for the S&P 500 and the Dow Jones Industrial Average, which racked up their largest losses of 2026.

The Dow fell 466 points, or 0.9%, while the S&P 500 closed down 0.3%. Both indexes snapped three-day winning streaks.

The tech-heavy Nasdaq Composite fared better, gaining 0.2%.

The mixed performance came amid policy shakeups from the White House, with President Donald Trump announcing on Truth Social that he's planning to ban large institutional investors from buying more single-family homes. Trump also took aim at defense contractors, saying he would ban their dividend payments and stock buybacks, while promising to cap their executives' pay.

"The decision leaves defense contractors and defense suppliers, such as GE Aerospace, in the lurch," my colleagues Janet Cho and Al Root wrote today. "What exactly is expected and how far down the supply chain this goes isn't immediately clear. Several companies and the White House didn't immediately respond to a request for comment."

The defense sector has returned substantial sums to investors, Janet and Al wrote:

Aerospace & Defense companies in the S&P 500 have paid out about $25 billion in dividends and bought back $14 billion worth of stock over the past 12 months, which works out to a shareholder yield of about 2.5%. Defense prime contractors, such as Lockheed, have paid out about $7.1 billion in dividends and bought back $7.8 billion in stock for a shareholder yield of about 4%.

Northrop Grumman stock finished the day down 5.5%, while Lockheed Martin fell 4.8%.

The Hot Stock: Intel +6.5% The Biggest Loser: First Solar -10.3%

Best Sector: Healthcare +1.0% Worst Sector: Utilities -2.5%

Latest Labor Data Reveal Stability

This week brings a slew of employment data for investors and policymakers alike. The earliest indicators published today appear to show the U.S. labor market stabilized in the final months of 2025.

But choppy hiring conditions persist, a dynamic that will likely keep the unemployment rate squarely in focus and signals a more muted jobs growth environment this year.

Alternative employment measures released Wednesday -- including December payroll growth from ADP and the Bank of America Institute -- pointed to a relatively stable end of the year.

"The labor market seems to have found feet on the jobs growth side, and that's a positive to take away," says David Tinsley, senior economist at Bank of America Institute.

That bodes well for the December jobs report due out from the Bureau of Labor Statistics on Friday. Economists expect unemployment ticked down to 4.5% in December after rising to a four-year peak of 4.6% in November.

Federal Reserve officials have signaled in recent months that they're carefully monitoring the jobless rate. If it, in fact, dipped (or even remained steady) in December, that likely keeps policymakers from lowering the fed funds rate at the upcoming Jan. 27-28 policy meeting.

Employers added 41,000 jobs to private payrolls in December, according to the ADP National Employment Report released Wednesday morning. That was a stronger print than economists surveyed by FactSet were expecting, after private payrolls declined by a revised 29,000 in November.

BofA clocked a similar rebound in the December payroll growth on Wednesday and the Institute of Supply Management's non-manufacturing employment index reading is in expansion territory for the first time since May -- a further indication of steadier conditions.

That said, Nela Richardson, chief economist at ADP, did caution that employment has been "choppy" since the Covid-19 pandemic and that one month of more robust hiring doesn't always translate into a sustained upswing.

"We still see some job growth, and we don't see a big uptick in layoffs, and so I think that puts the Fed in a reasonably balanced risk position in 2026, where they're trying to figure out this muddled middle between sticky inflation and a slowing but not tanking labor market," Richardson says.

Read here for my full rundown of Wednesday's data.

The Calendar

RPM International and TD Synnex release earnings tomorrow.

The BLS releases its preliminary estimates for third-quarter productivity and labor costs. Economists forecast a 4.7% increase in nonfarm business productivity and a 0.5% rise in unit labor costs. That compares with gains of 3.3% and 1%, respectively, in the second quarter.

What We're Reading Today

   -- Is Venezuela Just the Start? What Financial Advisors Are Telling Clients 
      About Geopolitical Risk. 
 
   -- Why Micron Stock Is Winning Big in the AI Memory Boom 
 
   -- Trump Wants to Lower Housing Costs. Here Are the Tools He Could Use. 
 
   -- Online Holiday Spending Hit Records. AI Helped. 
 
   -- Bank Stocks Are Off the Charts. Now Bonds Are Sending This Signal. 

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January 07, 2026 19:55 ET (00:55 GMT)

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