Stock Market Update

[BRIEFING.COM] A relatively strong opening following a stream of fresh earnings reports saw the S&P 500 and Nasdaq Composite quickly capture new all-time highs, though increasingly broad-based selling interest has narrowed the indices gains. 

Yesterday's earnings reports after the close featured several mega-cap names, making for a key driver of today's action.

The communication services sector (+0.5%) is among the top performers, bolstered by gains in Alphabet (GOOG 193.43, +1.92, +1.00%) after the company beat EPS expectations by $0.13 and reaffirmed the market about the industry's commitment to AI development by raising its capital spending guidance by $10 billion to $85 billion.

The sector also benefits from strength among cellular providers after T-Mobile US (TMUS 248.91, +14.98, +6.4%) beat EPS expectations by $0.16.

On the contrary, the consumer discretionary sector (-1.2%) is the worst performer so far, with its second largest component, Tesla (TSLA 301.85, -30.71, 9.23%), trading sharply lower after the company reported EPS in-line, with an 11.8% decrease in revenues year-over-year and deliveries falling 13.5% in that same time span. Furthermore, CEO Elon Musk warned of "a few rough quarters" ahead, citing the expiration of federal electric vehicle tax credits as a significant headwind.

Chipotle Mexican Grill (CMG 45.45, -7.33, -13.89%) also faces early pressure following its earnings release, which saw the company report EPS in line, with revenues rising a slim 3.0% year-over-year, and issuing flat FY25 comparable sales guidance.

The technology sector (+0.6%) shook its trend of early sluggishness from the previous two days, steadily building on modest opening gains that now seat it as the day's best-performing sector. 

While chipmakers continue to be a point of relative weakness (the PHLX Semiconductor Index is down 0.2%), the sector is benefitting from strong leadership in its mega-cap components.

Mega-caps as a cohort are performing well, with the Vanguard Mega Cap Growth ETF up 0.3%.

Smaller-cap stocks, on the other hand, have lost some of their momentum from the previous two days of outperformance, with the S&P Midcap 400 sporting a loss of 0.83%, while the Russell 2000 is down 1.1%. 

Breadth figures reflect the increasing selling interest, as decliners outpace advancers by a nearly 2-to-1 ratio on both the NYSE and the Nasdaq.

Treasuries are little changed today, as the 10-year note yield is up one basis point at 4.40%.

Reviewing today's data:

• New home sales increased 0.6% month-over-month in June to a seasonally adjusted annual rate of 627,000 units (Briefing.com consensus 650,000) from an unrevised 623,000 in May. This leaves the pace of sales near the lowest level of the year, comparable to what was seen in October. On a year-over-year basis, new home sales were down 6.6%.
  • The key takeaway from the report is that the pace of sales remained near the lowest level of the year with sharp decreases in sales in the Northeast and the West masking gains in the Midwest and the South. There was pressure on the median selling price, as homes priced between $300,000 and $399,000 accounted for 35% of all sales (2025 high), up from 25% in May.
• Initial jobless claims for the week ending July 19 decreased by 4,000 to a lowly 217,000 (Briefing.com consensus: 225,000). Continuing jobless claims for the week ending July 12 increased by 4,000 to 1.955 million.
  • The key takeaway from the report is still the same. The low level of initial jobless claims connotes a relatively solid labor market; however, the elevated level of continuing jobless claims connotes some added difficulty in finding a new job in the event one gets laid off by their employer.
• The preliminary S&P Global U.S. Manufacturing PMI for July hit 49.5 from a prior level of 52.9.
• The preliminary S&P Global U.S. Services PMI for July hit 55.2, from a prior level of 52.9.