Stock Market Update

[BRIEFING.COM] The stock market's advance today in the wake of yesterday's FOMC meeting resulted in a clean sweep of fresh record highs for the S&P 500 (+0.7%), Nasdaq Composite (+1.2%), and DJIA (+0.5%). 

A fair amount of choppiness followed yesterday's announcement of the expected 25-basis point rate cut and updated projections, though the major averages ultimately finished in the same mixed seating that preceded the announcement. 

Today's session was viewed as an important test of price action as the market further digested yesterday's happenings, a test that has so far been confidently passed. 

Market participants are understandably enthused by solidifying expectations for further easing, with the CME FedWatch Tool showing a 89.8% probability of a 25-basis point cut to 3.75–4.00% at the October FOMC meeting (up from 78.2% before yesterday's announcement), while the probability of another 25-basis point cut to 3.50–3.75% at the December meeting has risen to 78.4% from 72.8%

Mega-cap tech names hinted at today's rally as they traded higher in the pre-market, looking to recapture yesterday's losses that stifled growth at the index level. 

Most notably, NVIDIA (NVDA 176.38, +6.09, +3.58%) returned to its 50-day moving average (175.28), with Intel (INTC 32.07, +7.17, +28.79%) trading sharply higher on news that NVIDIA will take a $5 billion equity stake in Intel as the two companies announced a broad, multi-year collaboration to co-develop custom data center and PC products. 

While that news sent competitor Advanced Micro Devices (AMD 154.64, -4.52, -2.84%) lower, it has been a driving force behind the PHLX Semiconductor Index's 4.1% gain.

Elsewhere, the industrials sector (+1.2%) holds a similar gain, while seven other S&P 500 sectors see more modest growth. 

At this juncture, only the consumer staples (-0.7%) and energy (-0.4%) sectors trade in negative territory, though some variability in sector strength has seen as many as six sectors beneath their baselines at one given time. What has remained constant, however, is the modest nature of today's losses.

Among the retreating names are Darden Restaurants (DRI 189.94, -18.85, -9.03%), Cracker Barrel (CBRL 46.75, -2.84, -5.73%), and FactSet (FDS 315.24, -20.80, -6.19%), all of which reported misses on EPS expectations and revenues. 

Outside of the S&P 500, smaller cap indices such as the Russell 2000 (+2.1%) and S&P Mid Cap 400 (+1.3%) are outperforming, which can be attributed to the optimism around further easing from the Fed, considering smaller companies are more sensitive to borrowing costs and typically have a more domestic focus.

In separate Fed happenings, Bloomberg reports that President Trump has asked the Supreme Court to pause the ruling that barred him from firing Fed Governor Lisa Cook. 

Altogether, the market's broad-based strength, fueled by easing expectations and supportive corporate developments, underscores a resilient risk appetite as investors look ahead to the Fed's next moves.

Reviewing today's data:

• Weekly Continuing Claims 1.920 mln; Prior was revised to 1.927 mln from 1.939 mln, Weekly Initial Claims 231K (Briefing.com consensus 245K); Prior was revised to 264K from 263K
  • The key takeaway from the report is that initial claims settled back from what appeared to be an aberrantly high level in the prior week, returning to an area that is more consistent with a job market where layoff activity is relatively low.
• September Philadelphia Fed Index 23.2 (Briefing.com consensus 3.0); Prior -0.3
• August Leading Indicators -0.5% (Briefing.com consensus -0.1%); Prior was revised to 0.1% from -0.1%