Stock Market Update

[BRIEFING.COM] The major averages have rebounded from their early lows during a session in which continued indifference to trade developments has the market in a positive growth mode, despite some profit taking in certain mega-cap stocks.

Broad-based participation on higher than average volume has nine sectors trading in the green, largely due to an outperformance in small-cap and mid-cap stocks. The S&P Mid Cap 400 is up 0.9% compared to the S&P 500 being up 0.2%, while the Russell 2000 (+0.7%) also outperforms.

Meanwhile the Vanguard Mega Cap Growth ETF is down 0.2%.

The communication services sector (-0.6%) is the worst performer of the session as key components Netflix (NFLX 1256.47, -31.81, -2.5%) and Meta Platforms (META 725.58, -7.20, -0.98%) show weakness.

Mega-cap underperformance also has the information technology sector (-0.2%) in negative territory.

On the contrary, reports of Tesla (TSLA 304.45, +8.57, +2.9%) awaiting approval on a San Francisco Robotaxi service have contributed to the consumer discretionary sector (+0.9%) emerging as the day's strongest performer.

The industrials sector (+0.7%) is benefitting from a positive earnings report from Delta Air Lines (DAL 57.27, +6.57, +13.0%), which beat Q2 expectations and issued in-line EPS guidance for FY25. The news, in conjunction with reports of a record-setting Fourth of July travel weekend have shares of United Airlines (UAL 90.28, +10.10, +12.6%) rising as well.

The major averages had little reaction to a comforting jobless claims report, though it will likely reduce the already marginal chance of a July rate cut.

Treasuries are down slightly ahead of the $22 bln 30-year note reopening, as the 10-year note yield currently sits up 3 basis points at 4.37%.

Reviewing today's economic data:

• Initial jobless claims decreased by 5,000 for the week ending July 5 to 227,000 (Briefing.com consensus: 245,000).
• Continuing jobless claims for the week ending June 28 increased by 10,000 to 1.965 million, which is the highest level since November 13, 2021
  • The key takeaway from the report continues to be that businesses have been slow to let employees go, but that it has become more difficult to find a job after losing one. This dynamic reflects a softening labor market, but not a truly weak labor market.