US equity markets closed mixed on Thursday as weakness in major technology stocks contrasted with a sharp rally in defense shares, triggered by President Donald Trump’s call for a dramatic increase in military spending.
Defense stocks added an estimated $11 billion in combined market value in a single day, according to a CNBC tally, after Trump said the US military budget for fiscal year 2027 should rise to $1.5 trillion, far above the $901 billion approved by Congress for 2026.
Shares of Ford Motor also surged, adding to the session’s sector-specific volatility.
The Dow Jones Industrial Average rose 0.55%, or about 270 points, reclaiming levels above 49,200.
The S&P 500 finished flat, as gains in energy stocks offset losses in the technology sector.
The Nasdaq Composite climbed 0.4%, extending its winning streak to a third consecutive session.
Meanwhile, the Russell 2000 index of small-cap stocks jumped 1.1%, closing above 2,600 for the first time in its history, underscoring renewed risk appetite outside mega-cap technology.
Market volatility also increased, with Wall Street’s so-called fear gauge (VIX) rising 0.5% to its highest level in two weeks.
Trading activity was cautious ahead of Friday’s nonfarm payrolls report for December, one of the first major economic indicators released following the longest US government shutdown on record.
Investors are closely watching the data for clues on the direction of Federal Reserve policy, particularly as signs of a cooling labor market have begun to emerge.
Reflecting improving visibility, Fitch Ratings revised its economic outlook, forecasting US GDP growth of 2.1% in 2025 and 2.0% in 2026, after incorporating delayed economic data from the shutdown period.
Defense shares led market gains after Trump’s remarks reignited expectations of a multi-year expansion in military spending.
US Defense Stocks
Lockheed Martin surged 5%, General Dynamics and Northrop Grumman rose about 2% each, in addition Kratos Defense & Security Solutions jumped 14%.
The rally followed losses in the previous session, when Trump had warned that defense contractors could face restrictions on dividends and share buybacks unless they accelerate weapons production.
Shares of Ford Motor climbed 5%, reaching their highest level in a year and a half after Piper Sandler upgraded the automaker from neutral to overweight.
The investment firm also raised its price target to $16 from $11, citing improved earnings visibility and stronger execution.
In contrast, major technology names including Nvidia, Broadcom, and Microsoft declined as investors grew more cautious toward artificial intelligence-related stocks, whose valuations have surged sharply following years of outsized gains.
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