Stock Market Update

[BRIEFING.COM] A healthy dose of "buy the dip" optimism propelled the stock market to sound opening gains, while a lack of developments on the trade front or elsewhere helped the major averages carry the bulk of these gains through to the close.

Broad-based buying interest saw ten S&P 500 sectors close in positive territory, with the communication services (+2.6%), utilities (+1.7%), information technology (+2.2%), materials (+1.4%), and health care (+1.3%) sectors all finishing with gains above 1.0%.

Gains in the communication services and information technology sectors were underpinned by strong leadership in their mega-cap components. NVIDIA (NVDA 180.00, +6.28, +3.6%), Alphabet (GOOG 195.75, +5.80, +3.1%), Meta Platforms (META 776.37, +26.36, +3.5%), and Microsoft (MSFT 535.64, +11.53, +2.2%) all did their part in leading a rebound from Friday's retreat.

Tesla (TSLA 309.26, +6.63, +2.2%) also captured a nice gain following reports of a lucrative new compensation package for CEO Elon Musk, though a weaker showing from Amazon (AMZN 211.65, -3.10, -1.4%) limited the growth of the consumer discretionary sector.

While mega-cap stocks provided much of the early buzz, stocks of all sizes advanced today, and small-cap stocks actually outperformed the broader market. The Russell 2000 posted a gain of 2.0%, while the S&P Mid Cap 400 added 1.2%.

Breadth figures were decidedly positive, with advancers outpacing decliners by a greater than 5-to-1 ratio on the NYSE and a greater than 3-to-1 ratio on the Nasdaq.

The only notable point of weakness came in the energy sector (-0.4%), which faced pressure amid a 1.6% decrease in oil prices to $66.28 per barrel after OPEC+ agreed to increase its output by 547,000 bpd in September.

For the most part, stocks rebounded nicely from Friday's lows, and while a lack of headlines helped preserve the early gains, the market will have trade developments to navigate ahead of the new August 7 deadline for several key partners.

The market also anticipates a heavy week of earnings reports, with this morning's reports just a fraction of the companies set to report. Commscope (COMM 14.49, +6.70, +86.0%), which also sold its Connectivity and Cable Solutions to Amphenol (APH 108.63, +4.32, +4.1%) for $10.5 billion in cash, Energizer (ENR 28.06, +5.92, +26.7%), and Wayfair (W 73.54, +8.32, +12.8%) all scored big gains following their earnings reports.

Another session like today could see the S&P 500 (+1.5%) and Nasdaq Composite (+2.0%) challenge record high levels from last week, but the market will have more developments to navigate this week to establish today's advance as a continuing trend.

U.S. Treasuries began the week on a modestly higher note, padding their big, post-NFP gains from Friday. The 2-yr note yield slipped two basis points to 3.68%, while the 10-year note yield settled down two basis points to 4.20%

• Nasdaq Composite: +9.0% YTD
• S&P 500: +7.6% YTD
• DJIA: +3.8% YTD
• S&P Mid Cap 400: +0.7% YTD
• Russell 2000: -0.8% YTD

Reviewing today's data:

• Factory orders slumped 4.8% month-over-month in June (Briefing.com consensus: -5.1%) following an upwardly revised 8.3% increase (from 8.2%) in May. Excluding transportation, factory orders increased 0.4% month-over-month following a 0.3% increase in May. Shipments of manufactured goods jumped 0.5% on the heels of a 0.2% increase in May.
  • The key takeaway from the report is that the weakness in factory orders in June was largely concentrated in transportation equipment orders, so the headline isn't as bad as it appears at first blush; however, some extra attention will be paid next month to new orders for nondefense capital goods excluding aircraft—a proxy for business spending—to see if the weakness in June (-0.8%), which followed a 1.9% increase in May, persists.