Major Indices Close Mixed

On the 8th (local time), the New York stock market showed directionless trading and closed mixed. The Dow Jones Industrial Average rose 0.55% from the previous day to close at 49,266.11 points, while the S&P 500 Index edged up 0.01% to finish at 6,921.46 points. Meanwhile, the Nasdaq Composite Index fell 0.44% to close at 23,480.02 points.

The mid-cap focused Russell 2000 Index showed relative strength, rising 1.11% to 2,603.91 points. The VIX volatility index increased 0.46% to 15.45 points.

Trump's Defense Budget Increase Announcement Drives Market

The biggest market driver of the day was the defense sector. President Donald Trump announced plans to increase the U.S. defense budget by 50% through his Truth Social platform, driving defense stocks to continue their strong upward momentum. Trump proposed a $1.5 trillion defense budget for 2027.

Following this announcement, defense-related stocks have recorded 5 consecutive days of gains, attracting significant investor attention. Analysts suggest the plan has high feasibility, given that it was decided after consultations with senators, representatives, and the Secretary of Defense.

Big Tech and AI-Related Stocks Weaken

In contrast to the strength in defense stocks, artificial intelligence (AI) and Big Tech stocks showed lackluster performance. AI semiconductor leader NVIDIA fell more than 2%, while cloud computing company Oracle also declined over 1%.

Notably, Apple recorded its 7th consecutive trading day of decline, reflecting deteriorating investor sentiment. Concerns about Big Tech earnings outlooks and the profitability of AI investments have been weighing on stock prices.

Rob Haworth, Senior Director of Investment Strategy at U.S. Bank Asset Management, analyzed that "technology and AI will remain important themes in 2026, but the key question is which sectors will show actual use cases."

Awaiting Economic Indicators and Interest Rate Decisions

Investors analyzed data released on unemployment claims, trade deficit, and corporate restructuring to gauge the future direction of the Federal Reserve's (Fed) interest rate policy. Friday's scheduled employment report is expected to be the key variable determining the market's next direction.

Haworth emphasized, "We're seeing early signals of AI utilization in healthcare, insurance, and diagnostics," adding that "we need to watch whether performance expands to industrial and financial sectors." He noted, "For this trend to continue, performance improvements in these sectors this year are essential."

Future Outlook [AI Analysis]

The defense budget increase stance is likely to drive additional short-term gains in defense stocks. However, if Big Tech's correction continues, the overall index's upside potential may be limited.

Depending on the results of Friday's employment report, there's potential for the Fed's interest rate path to be recalibrated, suggesting market volatility will likely continue for the time being. For AI-related stocks, the presentation of concrete profit models is expected to be the turning point for reassessment.