US equities opened lower on Thursday, pushing the S&P 500 and the Dow Jones Industrial Average further away from their recent record highs, as weakness in major technology stocks offset a sharp rally in defence names and investors digested fresh labor market data.
The S&P 500 slipped 0.1%, while the 30-stock Dow fell 108 points, or 0.2%.
The Nasdaq Composite underperformed, sliding 0.3% as pressure mounted on several large-cap technology stocks that have been key drivers of the market’s recent gains.
Markets have largely shrugged off global geopolitical risks in recent sessions, but the combination of rising tensions and policy uncertainty could test investor confidence as the year progresses.
The renewed focus on defence spending comes at a time when investors are also watching developments in energy markets and international relations for signs of volatility that could spill over into equities.
Tech weakness weighs on broader market
Technology stocks were a drag on the session, with shares of Meta Platforms down around 1%, alongside declines in Apple and Netflix.
The losses in these heavyweight names weighed on the broader market and limited upside elsewhere, even as pockets of strength emerged in other sectors.
The pullback followed a cautious tone from the prior session, when both the S&P 500 and the Dow finished in the red after briefly touching fresh all-time highs.
Those declines were initially sparked by falling crude prices after President Donald Trump said interim authorities in Venezuela would turn over as much as 50 million barrels of oil to the United States, raising concerns about a potential increase in global supply.
Defence stocks surge on budget proposal
In contrast to the broader market’s decline, defence stocks posted outsized gains after President Trump called for a $1.5 trillion defence budget in 2027.
The proposed figure would represent a dramatic increase from the $901 billion defence budget approved by Congress for 2026 and signalled the potential for a significant expansion in military spending.
Northrop Grumman surged more than 8% on the day, while Lockheed Martin climbed 6%.
RTX advanced more than 3%, and Kratos Defence jumped nearly 13%, making defence one of the strongest-performing segments of the market.
The sharp rally underscored how quickly investor sentiment can rotate toward sectors expected to benefit from policy shifts, even as broader indices remain under pressure.
Jobless claims point to labour market resilience
On the economic front, new data suggested the US labour market remains resilient despite signs of cooling.
Initial jobless claims edged up only slightly in the first week of 2026, reinforcing the view that layoffs remain limited.
About 208,000 Americans filed new claims for unemployment benefits in the week ended Jan. 3, up from 200,000 a week earlier, according to data released by the Labor Department on Thursday.
The figure came in below economists’ expectations of 210,000, suggesting underlying strength in the labour market despite broader economic uncertainty.
Claims data has been volatile in recent weeks as seasonal adjustments struggle to fully capture the effects of the year-end holiday period.
Even so, initial claims remain near the lower end of the range seen over the past year, indicating that employers are largely holding on to their existing workforces.
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