Stock Market Update

[BRIEFING.COM] The stock market opened strongly after a wave of earnings reports and the announcement of a trade deal between the U.S. and Japan boosted global markets, and despite early weakness in chipmakers, news of a potential trade agreement between the U.S. and the EU lifted the major averages to their session highs.

President Trump announced the trade agreement with Japan that features a 15% tariff rate on Japanese imports and a $550 billion investment in the U.S. economy from Japan.

Equity futures ticked higher following the announcement, showing a comfortability in the 15% tariff rate. Similarly, stocks ticked higher following a Financial Times report that the proposed U.S.-EU trade deal will feature a 15% tariff rate.

In turn, the S&P 500 (+0.5%) reached a new all-time high level, eclipsing the previous mark of 6,336.08 set on Monday.

Eight sectors trade in positive territory, led by the industrials (+1.7%), health care (+1.5%), and energy (+1.1%) sectors.

The industrials sector is a beneficiary of today's earnings reports, with GE Vernova (GEV 627.03, +78.04, +14.2%) and Lennox Int'l (LII 676.38, +56.42, +9.1%) trading sharply higher after beating expectations and providing upside guidance. 

The information technology sector (+0.3%) was an early laggard, with investors noting a cautious tone from management on Texas Instruments (TXN 189.79, -25.13, -11.7%) earnings call yesterday afternoon. Though the sector as a whole has rebounded from early losses, chip makers remain a point of weakness, with the PHLX Semiconductor Index down 0.4%.

Yesterday's weakness in technology, and in particular, chipmakers, culminated in an underperformance of mega-cap stocks as a cohort. The Vanguard mega-cap index closed with a loss of 0.6%, though today it holds a modest gain of 0.3%.

Smaller-cap stocks, however, continue their recent trend of outperformance. The Russell 2000 is up 1.0%, and the S&P Mid Cap 400 is up 0.7%. 

Stocks of all sizes are benefitting from relatively strong buying interest, with advancers outpacing decliners by a nearly 2-to-1 ratio on the NYSE and NASDAQ. 

Reviewing today's data:

• Weekly MBA Mortgage Applications Index 0.8%; Prior -10.0%
• June Existing Home Sales 3.93 mln (Briefing.com consensus 4.00 mln); Prior was revised to 4.04 mln from 4.03 mln
  • The key takeaway from the report is that the median home sales price continued growing in June even though sales decelerated, which puts the spotlight on housing affordability at a time when mortgage rates remain high.