Stock Market Update

[BRIEFING.COM] Equity futures were little changed following a sizable batch of earnings reports before the open, and while the major averages faced early losses from the mega-cap stocks and underperforming technology sector (-1.1%), a strong showing from small-cap and mid-cap stocks reflected an inclination to rotate money within the market versus out of the market.

The pre-open action featured relative strength in the mega-cap stocks and some points of attrition for the broader market, with price setbacks for Coca-Cola (KO 69.62, -0.44, -0.6%), General Motors (GM 48.89, -4.32, -8.1%), Lockheed Martin (LMT 410.69, -49.84, -10.8%), Sherwin-Williams (SHW 340.08, -1.22, -0.4%), and Philip Morris International (PM 165.35, -15.13, -8.4%) following their earnings reports.

Semiconductor stocks also faced pressure out of the gate after NXP Semi (NXPI 228.00, -0.27, -0.1%) beat EPS expectations but failed to deliver upside guidance. The technology sector's position improved modestly throughout the session, but the PHLX Semiconductor Index still closed with a 1.8% loss.

Losses in the technology sector kept the Nasdaq Composite (-0.4%) in negative territory throughout the session, while the S&P 500 (+0.1%) captured a modest gain and logged a new closing record high. The DJIA (+0.4%) advanced further.

Buying interest broadened as the session progressed. Nine S&P 500 sectors closed with gains.

The top-performing health care sector (+1.9%) benefitted from earnings news. IQVIA (IQV 187.37, +28.41, +17.9%) finished as the largest advancer in the S&P 500 following an EPS beat and positive guidance. Though not an S&P 500 constituent, Medpace (MEDP 477.73, +168.85, +54.7%), another CRO services company, surged following its earnings after the close yesterday.

The next best-performing sectors were real estate (+1.8%), utilities (+1.3%), and materials (+1.3%).

Smaller-cap stocks and mid-cap stocks led the rally from early lows. Their outperformance persisted into the close. The Russell 2000 advanced 1.0%, and the S&P Mid Cap 400 finished with a gain of 1.4%.

Meanwhile, woes in the technology sector saw the Vanguard Megacap Growth ETF close with a loss of 0.6%. This stifled further gains across the major averages. The market-weighted S&P 500 advanced just 0.1%, while the equal-weighted S&P 500 finished up 1.3%.

Though there was a coalition of blue-chip stocks that retreated following their earnings reports, there were some winners in the category.

Better-than-expected earnings results from homebuilders D.R. Horton (DHI 153.17, +21.95, +16.7%) and PulteGroup (PHM 121.15, +12.50, +11.5%), which were achieved with mortgage rates at elevated levels, contributed to the outperformance of value stocks. The added boost in the homebuilding stocks had a lot to do with the thought of how much better the results can be if and when mortgage rates come down.

The iShares U.S. Home Construction ETF finished with a 7.9% gain today.

Lower Treasury yields also helped support the rotation within the stock market that featured the outperformance of value stocks over growth stocks.

U.S. Treasuries recorded their third consecutive day of gains after overcoming some early softness. The market did not receive any economic data to influence today's trade and things will remain subdued on that front tomorrow. However, the U.S. Treasury will hold a $13 billion 20-year bond reopening in the early afternoon. The 2-yr note yield dipped two basis points to 3.83%, and the 10-yr note yield dropped four basis points to 4.34%.

• Nasdaq Composite: +8.2% YTD
• S&P 500: +7.3% YTD
• DJIA: +4.6% YTD
• S&P 400: +2.3% YTD
• Russell 2000: +0.8% YTD