Stock Market Update

[BRIEFING.COM] The major averages trade near their highs at midday after recovering some of their losses from Tuesday afternoon. The S&P 500 (+0.3%) trades behind the Nasdaq (+0.5%) and the Russell 2000 (+1.1%).

The midweek session has been underscored by some guarded optimism about the Israel-Iran conflict with the market hoping that the situation will not escalate further. President Trump said earlier that Iran still has time to return to the negotiating table, but he still left the door open to a potential U.S. strike on Iran's nuclear facilities.

The market is also awaiting today's FOMC announcement at 14:00 ET, which is not expected to call for a rate cut, but the latest economic projections andFed Chairman Powell's comments at the subsequent press conference will help shape the market's expectations for the timing of the next cut. The fed funds futures market currently sees a 66.5% implied likelihood of a rate cut in September, according to the CME Fedwatch tool.

Ten sectors hold midday gains with the consumer discretionary sector (+0.7%) in the lead, followed by technology (+0.5%) and real estate (+0.5%) while energy (-0.4%) has lagged throughout the first half of today's session.

Consumer discretionary shares are benefiting from some dip buying after their weak start to June, which has the sector showing a 0.3% loss since the end of May versus a 1.6% month-to-date gain in the broader market. Casino and travel-related stocks have contributed to today's outperformance with Caesar's Entertainment (CZR 27.43, +0.98, +3.71%) trading ahead of other discretionary components. Top component Tesla (TSLA 323.15, +6.80, +2.15%) is also ahead while McDonald's (MCD 290.33, -1.98, -0.68% ) and other quick service restaurant names lag.

Top-weighted technology has been boosted by chipmakers with Marvell (MRVL 75.00, +5.01, +7.16%) leading the PHLX Semiconductor Index (+1.1%) higher after making optimistic comments about the expected growth rate of its data center segment.

On the downside, energy is pulling back alongside the price of oil (-0.76, or -1.0%, to $72.51/bbl) as the market remains hopeful that the U.S. will not take part in military action against Iran.

Treasuries trade on their highs with the 10-yr yield falling four basis points to 4.36%, toward last week's low (4.34%).

Reviewing today's economic data:

• May Housing starts declined 9.8% month-over-month to a seasonally adjusted annual rate of 1.256 million units (Briefing.com consensus 1.356 million), while building permits declined 2.0% month-over-month to a seasonally adjusted annual rate of 1.393 million (Briefing.com consensus 1.411 million).
  • The key takeaway from the report is that housing starts are weak, sitting at their lowest level since May 2020; moreover, a 2.7% month-over-month decline in single-unit permits doesn't connote an encouraging outlook for starts.
• Initial jobless claims for the week ending June 14 decreased by 5,000 to 245,000 (Briefing.com consensus 253,000), while continuing jobless claims for the week ending June 7 decreased by 6,000 to 1.945 million.
  • The key takeaway from the report is that it covers the week in which the survey for the June employment report is conducted, and with initial jobless claims still at a relatively low level, there will be a basis for economists to expect another decent gain in nonfarm payrolls (all things considered).