Stock Market Update

[BRIEFING.COM] The stock market saw some choppy action in today's trade, and while some pockets of the market posted solid performances, lingering weakness across tech and mega-cap names saw the S&P 500 (-0.8%), Nasdaq Composite (-1.2%), and DJIA (-1.1%) close below their 50-day moving averages for the second consecutive day. 

As many as nine S&P 500 sectors held losses at once during session lows, while nine sectors held gains at session highs. Ultimately, five sectors finished higher, but the underperformance of the consumer discretionary (-2.5%) and information technology (-1.7%) sectors was prominent through the entirety of the session. 

Home Depot (HD 336.48, -21.55, -6.02%) held the widest loss in the consumer discretionary sector after missing EPS estimates and lowering its FY26 guidance, which weighed on other retailers in the sector. 

Amazon (AMZN 222.55, -10.32, -4.43%) also lagged after Rothschild & Co. downgraded the stock to Neutral from Buy. 

The firm also downgraded Microsoft (MSFT 493.79, -13.70, -2.70%) to Neutral from Buy, which set the tone for early weakness in the technology sector. 

The sector faced pressure in its chipmaker components, which sent the PHLX Semiconductor Index 2.3% lower, widening its week-to-date loss past 9.0%. NVIDIA (NVDA 181.37, -5.23, -2.80%) traded lower ahead of its earnings report after the close tomorrow, while names like Advanced Micro Devices (AMD 230.29, -10.23, -4.25%) and Micron (MU 228.50, -13.45, -5.56%) faced even steeper losses. 

Meanwhile, Alphabet (GOOG 284.96, -0.64, -0.22%) faced some choppy action today, holding gains wider than 1.0% before ultimately closing below its flatline. Loop Capital upgraded the stock to Buy from Hold. 

Despite Alphabet ceding its gain, the communication services sector (+0.1%) still finished in positive territory. Warner Bros. Discovery (WBD 23.69, +0.95, +4.18%) led the way as it prepares to receive bids from prospective buyers, while Netflix (NFLX 114.09, +3.80, +3.44%) saw some buying interest after its 10-to-1 stock split took effect yesterday. 

The health care sector (+0.5%) unsurprisingly finished with one of the widest gains as investors continue to rotate into the sector amid valuation concerns that now surround the AI trade. 

Medtronic (MDT 100.80, +4.52, +4.69%) paced the gains after a solid beat-and-raise earnings report, while Merck (MRK 96.43, +3.57, +3.84%) finished higher after announcing it will increase its quarterly dividend to $0.85 per share from $0.81 per share. 

Elsewhere in the sector, managed care names including UnitedHealth (UNH 313.58, -6.94, -2.17%) and Elevance Health (ELV 324.53, -6.38, -1.93%) traded lower after President Trump lambasted health insurance companies in a Truth Social post this morning. 

The energy sector (+0.6%) ended up with the widest gain as crude oil futures settled today's session $0.76 higher (+1.3%) at $60.68 per barrel. 

Outside of the S&P 500, the Russell 2000 (+0.3%) and S&P Mid Cap 400 (+0.3%) shook off some early sluggishness to the tune of solid gains. 

On the macro front, December rate cut expectations got a modest boost from the unexpected overnight release of some October weekly jobless claims data. Initial jobless claims for the week ending October 18 were 232K (prior revised to 219K from 218K); continuing jobless claims for the week ending October 11 were 1947K (prior revised to 1916K from 1926K). The CME FedWatch Tool now assigns a 51.1% probability to a 25-basis point rate cut at the December FOMC meeting, up from 42.4% yesterday. 

Ultimately, today's action reflected a further rotation out of AI and mega-cap names and into more value-oriented positions. While breadth figures ended the day modestly positive, and sector strength was an almost even split, a 1.4% slide in the Vanguard Mega Cap Growth ETF was more than enough to facilitate losses at the index level. 

The AI trade continues to stumble ahead of NVIDIA's earnings release tomorrow after the close, as not even headlines of a partnership between NVIDIA, Microsoft, and Anthropic, or the news that the U.S. is working on the sale of advanced chips to Saudi Arabia, triggered any buying interest. 

U.S. Treasuries traded firmly with a bull steepener trade in play, having digested several economic releases today. The 2-year note yield settled down three basis points to 3.58%, and the 10-year note yield settled down one basis point to 4.12%. 

• Nasdaq Composite: +16.2% YTD
• S&P 500: +12.5% YTD
• DJIA: +8.3% YTD
• Russell 2000: +5.3% YTD
• S&P Mid Cap 400: +1.1% YTD

Reviewing today's data:

• Weekly Initial Claims 232K; Prior was revised to 219K from 218K
• Weekly Continuing Claims 1.947 mln; Prior was revised to 1.916 mln from 1.926 mln
• August Factory Orders 1.4% (Briefing.com consensus 0.8%); Prior -1.3%
  • The key takeaway from the report is that business spending remained on an upswing, evidenced by back-to-back increases in new orders for nondefense capital goods, excluding aircraft, in July and August.
• November NAHB Housing Market Index 38 (Briefing.com consensus 36); Prior 37