Stock Market Update

[BRIEFING.COM] Despite some earlier resilience in the broader market, the S&P 500 (-0.6%), Nasdaq Composite (-1.0%), and DJIA (-0.2%) closed with losses today as mega-cap names faced mounting pressure throughout the session.

It is worth noting that the S&P 500 and DJIA did notch new record intraday levels this morning before retreating, with the S&P 500 coming within 0.5 points of the 6,700 mark. 

The market's largest names faced pressure on the heels of yesterday's record-setting rally that was bolstered by NVIDIA's (NVDA 178.43, -5.18, -2.82%) announcement of up to a $100 billion investment in OpenAI as part of a strategy to deploy at least 10 gigawatts of NVIDIA systems.

That same announcement faced scrutiny today, with CNBC reporting that several senior investors have raised concerns to clients that the deal resembles a vendor financing arrangement. A separate CNBC report raised doubts around the feasibility of meeting the energy demands for 10 gigawatts, citing political and economic constraints. 

Oracle (ORCL 314.05, -14.10, -4.30%) also gave back the majority of yesterday's advance, contributing to the information technology sector's 1.1% loss. 

The consumer discretionary sector (-1.4%) was the worst-performing S&P 500 sector, facing pressure in its mega-cap components, Amazon (AMZN 220.71, -6.92, -3.04%) and Tesla (TSLA 425.85, -8.36, -1.93%).

The Vanguard Mega Cap Growth ETF retreated 1.1% today, and the S&P 500 Equal Weighted Index (+0.1%) outperformed the market-weighted S&P 500 (-0.6%). 

Smaller cap indices such as the Russell 2000 (-0.3%) and S&P Mid Cap 400 (-0.1%) fared better than their larger counterparts, though they ceded their early gains as the broader market retreated this afternoon.

Gains were modest for the most part across the five advancing S&P 500 sectors, too modest to offset the damage done by the mega-cap's retreat.

Only the energy sector (+1.7%) closed with a gain wider than 1.0%, supported by crude oil futures settling today's session $1.19 higher (+1.9%) at $63.44 per barrel.

The market heard from several FOMC members today, including Fed Chair Jerome Powell (FOMC voting member). While Mr. Powell's speech largely echoed his sentiments from last week's FOMC meeting, the market paid particular focus to his acknowledgment that "by many measures, for example, equity prices are fairly highly valued."

Today's pullback after fresh record highs could reflect market participants giving credence to valuation concerns amid a historic run, particularly in the mega-cap space, though investors have repeatedly shown a willingness to buy dips throughout this rally.

U.S. Treasuries finished with modest gains across the curve that pushed yields slightly lower from Monday's settlement, as today's 2-year note auction was met with okay (not great) demand. The 2-year note yield settled down one basis point to 3.59%, and the 10-year note yield settled down two basis points to 4.12%. 

• Nasdaq Composite: +16.9% YTD
• S&P 500: +13.2% YTD
• Russell 2000: +10.2% YTD
• DJIA: +8.8% YTD
• S&P Mid Cap 400: +5.1% YTD

• Q2 Current Account Balance -$251.3 bln (Briefing.com consensus -$302.1 bln); Prior was revised to -$439.8 bln from -$450.2 bln
• September S&P Global U.S. Manufacturing PMI - Prelim 52.0; Prior 53.0
• September S&P Global U.S. Services PMI - Prelim 53.9; Prior 54.5