Shares of software supply chain platform JFrog (NASDAQ:FROG) fell 4.7% in morning trading on January 8, 2026, as part of a broader market rotation out of the technology sector.
The decline came amid profit-taking in high-growth tech stocks following a strong recent rally, particularly in artificial-intelligence-related names.
The move reflected a wider trend, with the Nasdaq Composite experiencing the sharpest pullback among major indices as investors locked in gains from the prolonged AI-driven surge.
Multiple reports highlighted a shift in sentiment, with capital flowing out of overvalued growth sectors.
Defense stocks emerged as the primary beneficiaries of this rotation, rallying sharply after President Trump proposed a $1.5 trillion defense budget for fiscal 2027—a significant increase from the $901 billion allocated for 2026.
Major contractors led the gains, with Northrop Grumman advancing around 8% to 10% and Lockheed Martin rising nearly 8% in intraday trading.
The surge in aerospace and defense names helped offset tech weakness, leaving the S&P 500 relatively flat and supporting modest gains in the Dow Jones Industrial Average.
A rebound in crude oil prices further bolstered energy-related heavy industry plays, reinforcing the rotation into cyclical and value-oriented sectors.
Trump's budget proposal, announced via social media, cited "troubled and dangerous times" and aimed to fund a "Dream Military," with the president linking the increase to tariff revenues.
While the ambitious plan drew skepticism from budget watchdogs over fiscal implications, it ignited immediate enthusiasm among defense investors, highlighting geopolitical tensions as a key market driver in early 2026.