Stock Market Update

[BRIEFING.COM] The S&P 500 (-0.4%), Nasdaq Composite (-0.5%), and DJIA (-0.3%) hold modest losses as weakness in mega-cap names forced the major averages lower after spending the morning on their baselines.

Seven S&P 500 sectors now trade lower, with the information technology (-0.9%) and communication services (-0.9%) sectors weighed down by their mega-cap components, while the materials sector (-1.2%) holds the widest loss. 

The market's largest names faced pressure yesterday as investors mulled over Fed Chair Jerome Powell's remarks that stocks are "fairly highly valued." While the market has been quick to buy dips during this year's historic run, that sort of buying conviction has not manifested itself in today's session.

Muted responses to several notable AI-related developments before the open suggested a pullback may be in play. 

Micron (MU 159.80, -6.61, -3.97%) is a laggard after an impressive earnings beat and better-than-expected Q1 guidance, contributing to a 0.7% loss in the PHLX Semiconductor Index. 

Oracle (ORCL 301.91, -11.92, -3.80%) also trades lower today despite announcing five new U.S. AI data center sites under the Stargate Project—an ambitious AI infrastructure initiative that includes OpenAI and Softbank (SFTBY 63.64, +2.02, +3.28%)

Losses in big tech names have the S&P 500 Equal Weighted Index (flat) outperforming the market-weighted S&P 500 (-0.4%). The Vanguard Mega Cap Growth ETF has retreated 0.7%. 

Tesla (TSLA 437.70, +11.85, +2.78%) is currently the only "magnificent seven" stock that holds a gain, despite all seven names trading higher just before the open.

The consumer discretionary sector (+0.6%) is one of the top-performing S&P 500 sectors as a result. The sector also benefits from relative strength among homebuilder names after this morning's surprisingly strong August New Home Sales report (800,000; Briefing.com consensus 650,000).

Meanwhile, the energy sector (+1.9%) outperforms as crude oil prices have increased $1.36 to $64.77 per barrel, a change of 2.1%, and the defensive utilities (+0.7%) and consumer staples (+0.1%) sectors see some action as the market turns away from growth plays today.

• Weekly MBA Mortgage Applications Index 0.6%; Prior 29.7%
• August New Home Sales 800K (Briefing.com consensus 650K); Prior was revised to 664K from 652K
  • The key takeaway from the report is that the surge in new home sales occurred ahead of the larger drop in mortgage rates seen in September. Notably, there was a big uptick in the percentage of new homes sold over $800,000. That helps explain the large jump in average selling prices, and it may also be reflective of the large jump in stock prices lending some confidence to buying interest in the upper price brackets.