S&P 500 ends lower, AI stocks buoy Nasdaq

NEW YORK - The S&P 500 ended lower on Jan 7, pulled down by declines in JPMorgan, Blackstone and other financials, while Nvidia and Alphabet lifted the Nasdaq as investors shifted towards stocks related to artificial intelligence (AI).

Drops in the S&P 500 and Dow Jones Industrial Average followed intraday record highs earlier in the session.

Shares of housing acquisition companies tumbled after US President Donald Trump said he was moving to ban Wall Street investors from buying single-family homes, in a bid to reduce home prices.

Blackstone and Apollo Global Management dropped more than 5 per cent, contributing to a 1.4 per cent decline in the S&P 500 financials index. American Homes 4 Rent fell 4.3 per cent.

Real estate platform Zillow moved more than 2 per cent higher.

JPMorgan Chase fell 2.3 per cent after Wolfe Research downgraded the bank to “peer perform” from “outperform”.

Northrop Grumman slid 5.5 per cent and Lockheed Martin lost 4.8 per cent after Mr Trump said he would not permit dividends or stock buybacks for defence companies until they fixed problems with the production of military equipment.

In his social media post, Mr Trump did not mention specific companies.

Nvidia and Microsoft rose about 1 per cent each, and Alphabet rose more than 2 per cent as investors shifted back into AI stocks following recent worries they were overvalued.

Underscoring investor appetite for heavyweight AI players, Anthropic is planning a multibillion-dollar fundraise that would value the Claude chatbot maker at US$350 billion (S$448 billion).

That would make the privately held company more valuable than the vast majority of corporations, including Advanced Micro Devices, Chevron and Wells Fargo.

“Investors have come into 2026 with a similar playbook to last year: Buy tech and forget about it. Rumours that the AI trade was done turned out not to be true,” said Mr Jake Dollarhide, chief executive of Longbow Asset Management in Tulsa, Oklahoma.

Heading into fourth-quarter earnings season in the next few weeks, valuations on Wall Street remain relatively pricey. The S&P 500 is trading at about 22 times expected earnings, down from 23 in November, but above the index’s five-year average of 19, according to LSEG data.

The S&P 500 declined 0.34 per cent to end the session at 6,920.93 points.

The Nasdaq gained 0.16 per cent to 23,584.28 points, while the Dow Jones Industrial Average declined 0.94 per cent to 48,996.08 points.

Data on Jan 7 showed US job openings fell more than expected in November after rising marginally in October, while a separate ADP report showed that private payrolls increased less than expected in December.

While the latest labour market datasets mark a return to the standard release of economic data disrupted by the US government shutdown, they did little to change expectations of interest rate cuts from the Federal Reserve ahead of a key government payrolls report on Jan 9.

Investors were also monitoring geopolitical developments after the US said it seized a Russian-flagged, Venezuela-linked tanker as part of Mr Trump’s aggressive push to dictate oil flows in the Americas and force Caracas’ socialist government to become its ally.

The White House said on Jan 6 that Mr Trump was discussing options for acquiring Greenland, including potential use of the US military.

Memory and storage technology companies gave up some of their steep gains following a recent rally. Western Digital dropped almost 9 per cent and Seagate Technology fell 6.7 per cent. First Solar tumbled 10 per cent after Jefferies downgraded the solar panel maker’s rating to “hold” from “buy”.

Declining stocks outnumbered rising ones within the S&P 500 by a 3.4-to-one ratio.

The S&P 500 posted 28 new highs and 17 new lows; the Nasdaq recorded 106 new highs and 58 new lows.

Volume on US exchanges was relatively heavy, with 17.4 billion shares traded, compared with an average of 16.2 billion shares over the previous 20 sessions. REUTERS