Stock Market Update

[BRIEFING.COM] The stock market has steadily built on its opening gains following some encouraging economic data before the open in conjunction with a fresh wave of earnings reports. 

Retail sales increased in June after two consecutive months of decline, and initial jobless claims for the week ending July 7 unexpectedly decreased by 7,000. 

The market was responsive to the data, as stocks got off to a good start that has since only improved breadth figures and sector strength. 

The information technology sector (+1.1%) leads the advancing sectors, due in part to Taiwan Semiconductor Manufacturing (TSM 246.82, +9.26, +3.9%) beating Q2 EPS expectations and issuing strong guidance, reassuring the market about ongoing strength in demand for chips of all types. The PHLX Semiconductor Index is up 0.9%, extending its July gain to 3.6% versus a 4.0% month-to-date gain in the broader tech sector.

Chip stocks were notably sluggish yesterday after ASML (ASML 747.10, -7.35, -1.0%) stated that the company cannot confirm if it will deliver growth in FY26, but a stronger performance today has helped boost the tech-heavy Nasdaq Composite (+0.8%) ahead of the S&P 500 (+0.4%) and DJIA (+0.2%). 

The financials sector (+0.4%) has also benefitted from pre-market earnings reports, with regional banks contributing to today's strength.

Citizens Financial Group (CFG 48.98, +2.00, +4.27%) is trading sharply higher today following earnings, while U.S. Bancorp (USB 44.85, -0.83, -1.8%) and Fifth Third (FITB 42.28, -0.76, -1.8%) face some sell-the-news pressure after beating EPS expectations.

The industrials sector (+0.4%) is also among the top performers, as Snap-On (SNA 332.47, +19.46, +6.2%) has rallied back above its 200-day moving average (330.60) after the company beat Q2 expectations, while United Airlines (UAL 89.55, +1.08, +1.2%) hit a four-month high after reporting mixed results for Q2.

Treasuries have traded in a stable manner following today's economic data, with the 10-year not yield unchanged at 4.45%.

A closer look at today's data:

• June Retail Sales 0.6% (Briefing.com consensus 0.2%); Prior -0.9%, June Retail Sales ex-auto 0.5% (Briefing.com consensus 0.3%); Prior was revised to -0.2% from -0.3%
  • The key takeaway from the report is that the sales pickup was fairly broad-based across retail businesses following declines in April and May. Importantly, the June report also conveyed increases in discretionary spending activity, captured in areas like autos (+1.2%), apparel (+0.9%), building materials and garden equipment supplies (+0.9%), and food services and drinking places (+0.6%).
• Weekly Initial Claims 221K (Briefing.com consensus 230K); Prior was revised to 228K from 227K, Weekly Continuing Claims 1.956 mln; Prior was revised to 1.954 mln from 1.965 mln
  • The key takeaway from the report is the remarkably low level of initial jobless claims, which connotes limited layoff activity that fits hand-in-hand with good business conditions and a good outlook.
• July Philadelphia Fed Index 15.9 (Briefing.com consensus -0.2); Prior -4.0
• June Import Prices 0.1%; Prior was revised to -0.4% from 0.0%
• June Import Prices ex-oil 0.1%; Prior was revised to 0.0% from 0.3%
• June Export Prices 0.5%; Prior was revised to -0.6% from -0.9%
• June Export Prices ex-ag. 0.5%; Prior was revised to -0.7% from -1.0%
• July NAHB Housing Market Index 33 (Briefing.com consensus 32); Prior 32
• May Business Inventories 0.0% (Briefing.com consensus -0.1%); Prior 0.0%