Stock Market Update

[BRIEFING.COM] The stock market opened with mega-cap stocks and tech names suffering some notable losses, though steady improvement from morning lows saw the major averages finish significantly improved as those losses narrowed. The tech-heavy Nasdaq Composite (-0.6%) spent the entirety of the session in negative territory and closed with the biggest loss, while the S&P 500 (-0.1%) finished with a more modest loss. The DJIA (flat) made a push back to its baseline late in the session.

The consumer discretionary (-1.0%), information technology (-0.8%), and communication services (-0.5%) sectors closed in negative territory. The weakness in their mega-cap constituents weighed down the S&P 500 and Nasdaq Composite. The industrials sector (-0.1%) also finished just below its flatline.

At midday, Microsoft (MSFT 505.72, -4.05, -0.79%) was the only "Magnificent 7" name with a loss less than 1.0%. Meta Platforms (META 747.50, -3.98, -0.53%), and NVIDIA (NVDA 175.40, -0.24, -0.14%) would eventually see their losses pared, while Tesla (TSLA 323.90, -5.41, -1.64%), Apple (AAPL 226.01, -4.55, -1.97%), Alphabet (GOOG 200.19, -2.30, -1.14%), and Amazon (AMZN 223.81, -4.20, -1.84%) lagged.

NVIDIA's move was particularly impressive considering the stock was down as much as 3.5% in the late morning. At that point, the information technology sector was down 2.0%, and the PHLX Semiconductor Index (-0.7%) held a 3.0% loss.

Though much improved from earlier in the session, semiconductors still underperformed. Intel (INTC 23.54, -1.77, -6.99%) was the worst-performing stock in the S&P 500 after CNBC reported that the company is in conversations with investors, seeking to offer equity stakes for a discounted price.

The consumer staples (+0.8%) and health care (+0.6%) sectors were among the top-performing S&P 500 sectors, only bested by the energy sector (+0.9%), which was supported by crude oil futures settling $0.93 higher (+1.5%) at $62.70 per barrel.

The Vanguard Mega Cap Growth ETF retreated 0.7%, worse than its smaller-cap counterparts. The Russell 2000 (-0.3%) and S&P Mid Cap 400 (-0.3%) were down 0.3% and 0.4%, respectively, but also managed to work their way back from larger losses.

Relative strength in blue-chip stocks has helped the DJIA (flat week-to-date) outperform the S&P 500 (-0.8% week-to-date) and Nasdaq Composite (-2.1% week-to-date) so far this week.

Today's earnings reports resulted in stock-specific moves but had little effect on the broader market. TJX (TJX 138.24, +3.62, +2.69%) and Lowe's (LOW 257.10, +0.74, +0.29%) traded higher, while Target (TGT 98.69, -6.67, -6.33%) disappointed investors after posting a modest EPS beat but naming an in-house candidate, COO Michael Fiddelke, as the new CEO.

While mega-caps and semiconductors underperformed, defensive stocks once again advanced, and value stocks exhibited relative strength versus growth stocks in front of Fed Chair Powell’s speech on Friday at the Jackson Hole Symposium.

Markets will be closely watching Fed Chair Powell's speech for any hint of a shift toward a more accommodative rate stance. Still, with another CPI and PPI report due ahead of the FOMC meeting, Powell may choose to remain cautious until that data are fully digested.

While stocks improved steadily throughout the afternoon, there was not much immediate reaction to the 14:00 ET release of the July FOMC minutes, which showed broad support for keeping the fed funds rate unchanged at 4.25% to 4.50%. Participants highlighted both inflation and employment risks, though most viewed upside inflation risk as more pressing.

Treasuries had their gains trimmed in response to the minutes, edging slightly higher for the day with shorter tenors leading the advance alongside the poor showing from stocks. The 2-year note yield settled down one basis point to 3.74%, and the 10-year note yield settled down one basis point to 4.30%.

• Nasdaq Composite: +9.6% YTD
• S&P 500: +8.7% YTD
• DJIA: +5.63 YTD
• Russell 2000: +1.8% YTD
• S&P Mid Cap 400: + 1.7% YTD

Reviewing today's data:

• The weekly MBA Mortgage Index fell 1.4% to follow last week's 10.9% jump. The Refinance Index fell 3.2% while the Purchase Index ticked up 0.1%.