Stock Market Update

[BRIEFING.COM] The news has worked in the stock market's favor today. Micron (MU 108.69, +12.92, +13.5%) delivered better-than-expected results and guidance, citing robust AI demand, China teased the possibility of providing more policy stimulus, and weekly initial jobless claims, August durable goods orders, and the third estimate for Q2 GDP all meshed with an economy on a soft landing/no landing track.

For good measure, Southwest Airlines (LUV 30.41, +2.02, +7.1%) raised its Q3 RASM guidance, and both CarMax (KMX 78.49, +4.00, +5.4%) and Accenture (ACN 352.86, +15.82, +4.7%) provided pleasing earnings results and/or guidance for investors.

The major indices rightfully started today's trade with a bullish-minded orientation. The S&P 500 vaulted to a new record high, advancers swamped decliners at the NYSE and Nasdaq, and small-cap stocks took a lead position.

The opening strength, which had the S&P 500 and Nasdaq Composite up as much as 0.8% and 1.4%, respectively, lost some of its muscle when NVIDIA (NVDA 123.19, -0.32, -0.3%), up as much as 3.4%, rolled back into negative territory on some profit-taking interest. Including that gain, NVIDIA was up 10.1% this week.

The pullback in NVIDIA hasn't undercut the market, but it has taken some luster out of the AI momentum trade along with a Wall Street Journal report that the Department of Justice is probing Super Micro Computer (SMCI 387.06, -71.09, -15.5%) for accounting issues.

Still, there is a greater dispersion in buying interest today that has kept the indices grounded in positive territory. That interest has extended to Chinese ADRs and the materials sector (+1.9%), which are rallying on the stimulus trade. The iShares China Large-Cap ETF (FXI) is up 6.9%.

The materials sector is the only sector up more than 1.0% in a performance ranking for S&P 500 sectors that is mixed. Six are up and five are down.

The worst-performing sector is the energy sector (-1.8%), which continues to slide with oil prices. WTI crude futures are down 2.9% to $67.66/bbl and Brent crude futures are down 2.5% to $71.06/bbl, feeling some weight from an OPEC+ announcement that it will proceed with an oil output increase in December.

Elsewhere, Treasury yields have risen in the wake of today's data. The 2-yr note yield, at 3.53% before the 8:30 a.m. ET releases, is at 3.62%, up seven basis points from yesterday's settlement. The 10-yr note yield, at 3.75% before the releases, is at 3.81%, up three basis points from yesterday's settlement.

Reviewing today's economic data:

• Initial jobless claims for the week ending September 21 decreased by 4,000 to 218,000 (Briefing.com consensus 224,000). Continuing jobless claims for the week ending September 14 increased by 13,000 to 1.834 million.
  • The key takeaway from the report is the continuing low level of initial jobless claims -- a leading indicator -- that isn't leading the market to think a recession is imminent.
• Durable goods orders were flat month-over-month in August (Briefing.com consensus -2.9%) following an unrevised 9.9% increase in July. Excluding transportation, durable goods orders were up 0.5% month-over-month (Briefing.com consensus 0.1%) following an upwardly revised 0.1% decline (from -0.2%) in July.
  • The key takeaway from the report is that new orders for nondefense capital goods excluding aircraft -- a proxy for business spending -- increased 0.2% month-over-month, bouncing back from a 0.2% decline in July.
• The third estimate for Q2 GDP remained at 3.0% (Briefing.com consensus 3.0%). Similarly, the third estimate for the Q2 GDP Deflator remained at 2.5% (Briefing.com consensus 2.5%).
  • The key takeaway from this backward-looking report (we're just days away from the end of the third quarter) is that personal spending (+2.8%) was nowhere near a recession glide path, having exceeded the prior eight quarter average of 2.2%.
• Pending home sales were up 0.6% in August (Briefing.com consensus 1.0%) versus -5.5% in July.