Stock Market Update

[BRIEFING.COM] The major averages finished mixed today as another sharp pullback across semiconductor stocks and select mega-cap names masked broad strength across several defensive sectors. The S&P 500 finished flat, the Nasdaq Composite (-0.8%) ended lower, while the DJIA (+1.1%) notched record highs.

Despite the divergence beneath the surface, all three major averages remain up between 1.8% and 2.1% for the week. Semiconductor stocks remained under pressure for a second consecutive session, with the PHLX Semiconductor Index falling 5.4% as the recent momentum trade continued to unwind. Weakness was particularly pronounced among memory names after Bloomberg reported that Apple (AAPL 308.63, +14.25, +4.84%) is lobbying for permission to purchase memory chips from China's ChangXin Memory Technologies.

The development weighed on names such as Sandisk (SNDK 1745.00, -287.22, -14.13%) and helped leave the information technology sector (-1.5%) as the day's weakest performer.

Pressure across other areas of mega-cap technology was also more selective than recent sessions. Meta Platforms (META 582.88, -30.03, -4.90%) gave back a portion of yesterday's sharp advance, while Tesla (TSLA 392.82, -32.48, -7.64%) extended its intraday reversal despite reporting better-than-expected second-quarter deliveries earlier in the session. Those moves also weighed on the communication services (-0.7%) and consumer discretionary (-0.7%) sectors, the only other S&P 500 sectors to finish in negative territory. The Vanguard Mega Cap Growth ETF finished 1.0% lower.

However, Genuine Parts (GPC 132.57, +15.17, +12.92%) finished as the top-performing S&P 500 component after Bloomberg reported that O'Reilly Auto (ORLY 90.25, -2.44, -2.63%) is interested in acquiring the company's automotive parts business.

Away from technology, leadership rotated decisively toward more defensive areas of the market. The health care (+2.7%), consumer staples (+2.4%), and utilities (+2.3%) sectors finished with the largest gains, while the materials sector (+2.1%) also outperformed. Health care stocks continued to build on their recent momentum, with hospital operators such as Universal Health (UHS 158.33, +7.75, +5.15%) and HCA (HCA 410.50, +17.26, +4.39%) among the sector's strongest performers after the Centers for Medicare & Medicaid Services proposed updates aimed at strengthening Medicare program integrity, combating fraud, and expanding access to home health care.

Today's leadership differed from recent sessions in one notable respect. While the S&P 500 Equal Weight Index (+0.8%) finished with a nice gain, smaller-cap stocks did not participate in the rotation out of tech, with the Russell 2000 (-0.6%) and S&P Mid Cap 400 (-0.4%) both ending lower after the Russell reached record highs earlier this week.

Today's session reinforced that investors continue to differentiate aggressively beneath the surface rather than broadly reduce equity exposure. While semiconductor stocks remained under pressure and weighed on the technology-heavy indices, continued leadership from health care and several other defensive groups helped the DJIA notch another record high and kept the broader market's weekly advance largely intact.

U.S. Treasuries finished the holiday-shortened week on a mixed, but generally flat note, locking in losses for the week. The 2-year note yield settled down two basis points to 4.14% (+5 basis points this week), and the 10-year note yield settled up one basis point to 4.49% (+12 basis points this week). 

Bond and equity markets will be closed tomorrow, returning for a full session on Monday.

• Russell 2000: +20.7% YTD
• S&P Mid Cap 400: +15.1% YTD
• Nasdaq Composite: +11.2% YTD
• DJIA: +10.1% YTD
• S&P 500: +9.3% YTD

Reviewing today's data:

• June Nonfarm Payrolls 57K (Briefing.com consensus 110K); Prior was revised to 129K from 172K, June Nonfarm Private Payrolls 49K (Briefing.com consensus 88K); Prior was revised to 97K from 120K, June Unemployment Rate 4.2% (Briefing.com consensus 4.3%); Prior 4.3%, June Average Hourly Earnings 0.3% (Briefing.com consensus 0.3%); Prior 0.3%, June Average Workweek 34.3 (Briefing.com consensus 34.3); Prior 34.3
  • The key takeaway from the report for the market, which likes to see the good in the bad, is that the softer payrolls and pressure on real earnings should temper concerns about an imminent rate hike.
• Weekly Initial Claims 215K (Briefing.com consensus 220K); Prior was revised to 216K from 215K, Weekly Continuing Claims 1.814 mln; Prior was revised to 1.812 mln from 1.821 mln
  • The key takeaway from the report is that initial jobless claims continue to track at low levels, offering a nice cue that suggests the labor market, overall, remains on solid ground.
• May Factory Orders -1.3% (Briefing.com consensus 1.5%); Prior was revised to 5.3% from 4.8%
  • The key takeaway from the report is that the headline weakness was a function of a large decline in volatile transportation equipment orders. Exclude that factor, and factory orders were quite solid in May.

[BRIEFING.COM] The S&P 500 (-0.5%), Nasdaq Composite (-1.4%), and DJIA (+0.6%) are closing in on a mostly lower finish to the week, though each index is still looking at a weekly gain of more than 1%.

The financials sector (+1.1%) is on pace to finish as the second best-performing S&P 500 sector for the week, following up yesterday's 2% rally with a strong showing today.

Bitcoin has made another move higher today, supporting names like Robinhood Markets (HOOD 112.63, +3.98, +3.66%) and Coinbase Global (COIN 165.81, +6.57, +4.13%).

Though not an S&P 500 component, Blue Owl Capital (OWL 8.97, +0.33, +3.82%) moves higher today after the company reported easing redemption pressure across its private credit funds.

[BRIEFING.COM] The major averages continue to trade in a similar, mostly lower fashion as the market enters the final hour of the session.

Health services providers such as Universal Health (UHS 159.73, +9.15, +6.08%) and HCA (HCA 412.16, +18.92, +4.81%) remain some of the strongest-performing S&P 500 components today after the Centers for Medicare and Medicaid Services proposed updates to strengthen Medicare program integrity, combat fraud, and expand access to home health care.

[BRIEFING.COM] The S&P 500 (-0.5%), Nasdaq Composite (-1.2%), and DJIA (+0.5%) continue to trade in a mostly lower fashion this afternoon.

The information technology sector (-1.9%) is charting session lows with memory names such as Sandisk (SNDK 1740.00, -292.22, -14.38%), Western Digital (WDC 533.70, -64.67, -10.81%), and Seagate Tech (STX 804.45, -110.74, -12.10%) among the worst performers. Today's pressure across memory names is being partially attributed to an earlier report from Bloomberg that Apple (AAPL 307.78, +13.40, +4.55%) is making a lobbying effort to buy Chinese-made memory chips.

[BRIEFING.COM] The major averages trade in an increasingly narrow range as the long holiday weekend approaches.

Corporate news flow is on the lighter side, but there are still a few headlines of note across today's outperformers. Bloomberg reported that Amazon (AMZN 243.89, +2.19, +0.91%) is looking to commence an internet offering later this year following its most recent satellite launch, while The Information reports that Microsoft (MSFT 391.11, +6.83, +1.78%) is planning an overhaul of its AI application.