Stock Market Update

[BRIEFING.COM] The stock market faced some early selling pressure following yesterday's record highs and the announcement of a 35% tariff on Canadian imports effective August 1.

President Trump also remarked in an NBC News interview that most trading partners will face tariffs between 15 and 20%, and that the EU will get a tariff letter today. 

Trade developments have motivated some profit-taking in recent weeks, but the market has been quick to find optimism and show resiliency, which continues to be the case today. The major averages rose off of session lows after White House officials said that USMCA goods will be exempt from the 35% Canadian tariff and that the lower 10% tariff on Canadian energy will remain in place.

In turn, the energy sector (+0.5%) is today's best performer, with a majority of its components sporting modest gains.

Information technology (+0.2%) and consumer discretionary (+0.3%) also outperform, though this is attributed to strength in a few of each sector's mega-cap components. 

Mega-caps hold a slight edge over the broader market, as the Vanguard Mega Cap Growth ETF is unchanged for the day, while the Equal Weight S&P 500 Index is down 0.9%.

Of the eight sectors trading in the red, the health care sector (-1.2%) is the biggest drag, as companies wrestle with the proposed 200% tariff on pharmaceutical imports.

The financials (-1.1%), materials (-1.1%), consumer staples (-0.6%), and utilities (-0.5%) sectors also display losses greater than that of the S&P 500 (-0.3%).

Treasuries are on their lows, with the 10-yr yield rising seven basis points to 4.42%.

The afternoon session will have week-ending implications for the S&P 500 as it started this morning's trade flat for the week. Yesterday's start was also sluggish, but a recovery from early lows propelled the S&P 500 and the Nasdaq Composite to record levels in the afternoon.