The S&P 500 ended Monday slightly lower as key stocks in the artificial intelligence trade came under pressure.
The broad market index lost 0.16% to settle at 6,816.51 after beginning the session in positive territory. The Dow Jones Industrial Average slipped 41.49 points, or 0.09%, to finish at 48,416.56, while the Nasdaq Composite fell 0.59% to 23,057.41.
Certain AI stocks bogged down the broader market during Monday's session, with shares of Broadcom and Oracle — two names that led a rotation away from AI last week — declining more than 5% and more than 2%, respectively. Others like Microsoft also also suffered some losses.
Investors moved instead to areas more sensitive to the economy, such as consumer discretionary and industrials. They also loaded up on health-care shares.
Those moves came after the S&P 500 and tech-heavy Nasdaq finished the week lower, while the 30-stock Dow — which is less exposed to tech and AI than the other two benchmarks — rose meaningfully. Additionally, Oracle plunged 12.7% during the weekly period, while Broadcom shed more than 7%. The S&P 500 tech sector dropped 2.3%.
"It feels like everyone hates the AI trade right now. There's no doubt about it," David Wagner, Aptus Capital Advisors' head of equities, told CNBC. "But I see the market continuing to be led by the concentration in the market, i.e., the Magnificent Seven names, because of that core tenet that I think the market continues to underestimate, [which] is that operating leverage that these companies have."
"As long as you get some type of revenue growth, these guys are going to continue expanding their margin, and they're going to be beneficiaries of strong returns next year," he added.
In the near term, Wagner isn't too worried about the broader market's performance, saying that pullbacks can be "healthy" and "normal." While some of the so-called Santa Claus rally has likely taken place, he anticipates that there are "still some gains ahead."
"For the market to change, the fundamentals have to change, and I just don't see that happening in the interim," he said.
Economic data reports could set the tone for the market this week. November nonfarm payrolls figures are set for release Tuesday, along with October retail sales figures. These reports were delayed due to the U.S. government shutdown that took place in the fall.
Economists polled by Dow Jones are expecting the November nonfarm payroll data to show an increase of 50,000 on the month, which would mark a significant drop from the 119,000 jobs added in September.
The November consumer price index is due out later in the week on Thursday.
