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Indexes down: Dow 0.24%, S&P 500 0.09%, Nasdaq 0.07%
All three indexes set for yearly gains
Energy, communication services stocks outperform peers
Updates with late morning trading
By Purvi Agarwal and Nikhil Sharma
Dec 30 (Reuters) - The S&P 500 and the Nasdaq were subdued in choppy trading on Tuesday, as support from communication services stocks was capped by declines in tech and financials, with the latter also weighing on the Dow.
Communication services shares .SPLRCL were among the biggest gainers on the S&P 500, on the back of a 1.1% gain in Meta Platforms META.O. The Instagram parent said on Monday it would acquire artificial intelligence startup Manus.
Information technology stocks .SPLRCT were range-bound, with Apple AAPL.O and Nvidia NVDA.O edging lower, and Microsoft MSFT.O inching up.
These heavyweight stocks snapped a six-session winning streak - their longest since September - on Monday. The rally had also propelled the S&P 500 .SPX to a record high last week.
"The growth rates are going to converge between technology and everything else next year and the valuation gap is so wide, it absolutely is justified to see repositioning," said Mark Hackett, chief market strategist at Nationwide.
"It's just a healthy rebalancing of allocations more so than an emotionally driven sell-off (in tech)."
However, trading volumes remained thin in the holiday-truncated week, which analysts expect could heighten market volatility.
Losses in Goldman Sachs GS.N and American Express AXP.N weighed on the Dow.
At 12:00 p.m. ET, the Dow Jones Industrial Average .DJI fell 114.28 points, or 0.24%, to 48,345.84, the S&P 500 .SPX lost 5.83 points, or 0.09%, to 6,899.58 and the Nasdaq Composite .IXIC lost 16.20 points, or 0.07%, to 23,458.02.
The S&P 500 and the Dow are set for their eighth consecutive month of gains, their longest monthly winning streak since 2017. Some investors eye a "Santa Claus rally", a seasonal phenomenon in which the S&P 500 typically posts gains over the last five trading days of the year and the first two trading days of January, according to the Stock Trader's Almanac.
Minutes from the Federal Reserve's December 9-10 meeting will be scrutinized later in the day, after the central bank delivered an expected 25-basis-point cut, but took a cautious stance on further reductions.
However, mild economic data since then and expectations of a new dovish Fed chair have fueled optimism around further U.S. interest rate cuts in 2026.
The S&P 500 has added about 17% so far this year, as the frenzy to capitalize on artificial intelligence helped the U.S. benchmark edge ahead of Europe's STOXX 600 .STOXX, despite investors diversifying away from U.S. stocks earlier in the year dominated by trade disputes and an uncertain central bank outlook.
Meanwhile, Russia said it would toughen its negotiating stance after accusing Kyiv of attacking a Russian presidential residence. The fading hopes of a peace deal supported oil prices, allowing S&P's energy sub-index .SPNY to outperform peers with a 0.6% rise.
T1 Energy TE.N rose 3% after the solar firm announced it had completed a $160 million sale of Section 45X production tax credits to a leading, investment-grade buyer of tax credits.
Advancing issues outnumbered decliners by a 1.15-to-1 ratio on the NYSE and by a 1.21-to-1 ratio on the Nasdaq.
The S&P 500 posted 3 new 52-week highs and one new low while the Nasdaq Composite recorded 29 new highs and 158 new lows.
S&P 500 vs STOXX 600: Wall Street maintains slight edge in annual returns https://reut.rs/4994kad
(Reporting by Purvi Agarwal and Nikhil Sharma in Bengaluru; Editing by Krishna Chandra Eluri)
((Purvi.Agarwal@thomsonreuters.com;))
