Stock Market Update

[BRIEFING.COM] The stock market opened to broad-based gains after President Trump announced that companies committed to domestic production will be exempt from the 100% tariff rate on chips and semiconductors, though opening excitement quickly faded to an equally broad retreat that now sees the major averages mixed for the day. 

Chipmaker stocks traded higher in response to the exemptions, with NVIDIA (NVDA 181.06, +1.64, +0.91%) hitting a fresh record high of 183.88 before narrowing its gain. The PHLX Semiconductor Index is up 1.4%, though it had been up as much as 2.7%.

Elsewhere in the information technology sector (+0.2%), Apple (AAPL 219.72, +6.48, +3.04%) continues to build on yesterday's rally after the company announced an investment increase of $100 billion in domestic production. 

At this morning's peak, ten S&P 500 sectors traded in positive territory, pushing the S&P 500 (-0.2%) within 0.6 points of its all-time closing high (6,389.77). Today's retreat from those levels reflected the possibility that while the market might claim victories in regard to carve-outs, the tariffs that took effect overnight on key trading partners pushed the overall tariff rate to historically high levels. 

The Nasdaq Composite (+0.2%) still holds a slight gain, while the DJIA (-0.7%) lags.

At one point, nine S&P 500 sectors faced losses, and while sector strength has improved since then, the major averages continue to chart new session lows as the gain in the technology sector narrows. 

The health care sector (-1.2%) is the worst-performing S&P 500 sector, as its largest component, Eli Lilly (LLY 645.01, -101.36, -13.58%), trades sharply lower in response to results from its weight-loss drug pill trial. Those results, on the surface, were positive, yet they reportedly didn't measure up to the competition, showing a 12.4% weight loss versus 15% for Novo Nordisk A/S (NVO 48.77, +3.39, +7.47%) weight-loss drug pill and an overall dropout rate of 24.4% at the highest dose.

The market was little moved by today's economic data releases that featured an improved productivity report and a soft jobless claims report. 

Elsewhere, Bloomberg reports that Fed Governor Chris Waller is the top contender for the next Fed Chair nominee among President Trump's advisers. 

Reviewing today's data: 

• Q2 Productivity - Prel 2.4% (Briefing.com consensus 2.2%); Prior was revised to -1.8% from -1.5%, Q2 Unit Labor Costs - Prel 1.6% (Briefing.com consensus 1.5%); Prior was revised to 6.9% from 6.6%
  • The key takeaway from the report is that productivity improved noticeably from the first quarter, helping to tamp down unit labor costs. The 1.8% annualized rate of productivity growth in the current business cycle (starting Q4 2019), though, is still below the long-term rate of 2.1% since the first quarter of 1947.
• Weekly Initial Claims 226K (Briefing.com consensus 220K); Prior was revised to 219K from 218K, Weekly Continuing Claims 1.974 mln; Prior was revised to 1.936 mln from 1.946 mln
  • The key takeaway from the report, in light of the soft nonfarm payrolls data seen last week, is the jump in continuing jobless claims, which will be seen as a sign/symptom of a softening labor market.
• June Wholesale Inventories 0.1% (Briefing.com consensus 0.2%); Prior -0.3%