Closing Bell: Defense Bid Lifts Industrials; Chips Rotate; Oil Climbs

U.S. stocks finished mixed as money rotated toward industrials and defense while parts of technology cooled. At the close the Dow Jones rose +0.55%, the S&P 500 rose slightly +0.0077%, the Nasdaq Composite fell −0.44%, and the Russell 2000 advanced +1.11%. The 10-year Treasury hovered near ~4.18%, the VIX stayed contained in the mid-15s, and oil pushed higher with

Trump’s defense push and aerospace and defense movers

President Trump called for a very large increase in U.S. defense spending to a proposed $1.5 trillion budget for fiscal 2027, framed as a response to a more dangerous world and financed in part by tariff revenues. The proposal arrived alongside tougher rhetoric on contractor reinvestment. Defense shares rallied on the headline: Lockheed Martin (LMT), Northrop Grumman (NOC), RTX (RTX), General Dynamics (GD), L3Harris (LHX), and Huntington Ingalls (HII) all caught bids, reflecting renewed positioning for bigger backlogs and a longer runway for modernization. While the final number depends on Congress, the market response signaled expectations for sustained demand.

Oil higher, rates steady, volatility calm

Crude firmed after U.S. inventory data showed a larger-than-expected draw, and traders stayed focused on shifting supply dynamics. Brent and WTI both finished higher, supporting Energy even as broader risk appetite cooled. Rates were stable to slightly firmer with the 10-year near 4.18%, and equity volatility remained subdued with the VIX in the mid-teens. The mix pointed to a market that is recalibrating rather than stressing, with commodities cushioning cyclicals while tech leadership narrowed.

Mega caps and defensives shared the podium

Growth leadership rotated back to the household names as Alphabet (GOOGL), Amazon (AMZN), and Tesla (TSLA) finished higher, helped by the continuing AI halo out of CES and a steadier rates backdrop. At the same time, Staples caught a broad bid: Costco (COST) led on firm traffic and membership strength, Walmart (WMT) held up as a defensive bellwether, and Coca-Cola (KO) and PepsiCo (PEP) gained on pricing power and cash flow visibility. Industrials joined the advance, with Caterpillar (CAT) and Deere (DE) climbing on infrastructure, energy, and precision-ag narratives that continue to attract longer-cycle capital even as investors stay selective in higher-multiple tech.

Sector performance

Breadth was two-way. Industrials and Energy outperformed on defense and oil strength, while parts of Information Technology lagged as memory and storage cooled. Real Estate was mixed as investors weighed rates against policy headlines and fundamentals. The day’s leadership fit a classic rotation day rather than a wholesale change in trend.

Economic data

Weekly initial jobless claims ticked up to about 208K, still consistent with a labor market that is cooling gradually rather than breaking. The claims print arrived alongside a steady run of trade and productivity updates that investors treated as neutral for the soft-landing narrative ahead of Friday’s nonfarm payrolls.

Friday, Jan 9 (ET)

8:30 a.m. Employment Situation (Dec) — Nonfarm Payrolls, Unemployment Rate, Average Hourly Earnings, Labor Force Participation.

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