Stock Market Update

[BRIEFING.COM] The stock market ended the week on an upbeat note, as the major averages snapped their three-day skid, helping the Dow (+0.7%) return to little changed for the week (-0.2%). The S&P 500 (+0.6%) and Nasdaq (+0.4%) lost a respective 0.3% and 0.7% for the week.

The higher finish did not come without a fight as continuation of recent weakness in mega cap names provided some early pressure that countered general strength in the broader market. That strength persisted into the afternoon while many of the early laggards like NVIDIA (NVDA 178.19, +0.50, +0.28%) and Microsoft (MSFT 511.46, +4.43, +0.87%) overcame their initial weakness.

Investors received a solid Personal Income/Spending report for August this morning, but expectations for two more rate cuts by the end of the year inched higher, nonetheless.

Ten sectors finished the day in positive territory with seven rising more than 0.8%. The heavily-weighted consumer discretionary sector (+1.5%) ended up among the leaders with help from a daylong rally in the shares of Tesla (TSLA 440.41, +17.02, +4.02%).

Utilities (+1.6%), materials (+1.1%), and real estate (+1.0%) also finished among the leaders while energy (+1.0%) met some late profit taking after this week's show of strength. Still, the sector gained 4.7% alongside a $3.28, or 5.3%, rise in the price of WTI crude.

The communication services sector (+0.1%) finished among the laggards, almost entirely due to weakness in its top component—Meta Platforms (META 743.75, -5.16, -0.69%). The stock fell to a three-week low, masking gains in nearly all other members of the sector. Video game publishers Electronic Arts (EA 193.35, +25.03, +14.87%) and Take-Two (TTWO 256.12, +11.01, +4.49%) both soared to fresh records in late trade after The Wall Street Journal reported that Electronic Arts is nearing a $50 billion deal to be taken private.

Top-weighted technology (+0.2%) also lagged throughout the day due to relative weakness in its largest components. Still, more than half of the sector's components finished in the green with Intel (INTC 35.50, +1.51, +4.44%) extending its recent run to a level not seen since mid-July 2024.

The consumer staples sector (-0.1%) was the lone decliner, and it too was dragged down by the weight of one of its top components. Costco (COST 915.95, -27.36, -2.90%) fell to its lowest level since early April despite a Q4 EPS beat while only seven other sector members finished in the red.

Longer-dated Treasuries recorded slim losses (10-yr yield +2 bps to 4.19%) while the short end edged higher (2-yr yield -1 bp to 3.65%), showing little concern over next week's likely government shutdown or newly announced tariffs that will be coming into effect on October 1. Imported branded and generic pharmaceuticals will be hit with a 100% tariff if the producer is not building a domestic presence, heavy truck imports will face a 25% tariff while kitchen cabinets, bathroom vanities, and associated products will be hit with a 50% tariff. Upholstered furniture will come with a 30% tariff.

Reviewing today's data:

• Personal income increased 0.4% month-over-month in August (Briefing.com consensus: 0.3%) following a 0.4% increase in July. Personal spending jumped 0.6% month-over-month (Briefing.com consensus: 0.4%) following a 0.5% increase in July. The PCE Price Index was up 0.3% month-over-month, as expected, and the core PCE Price Index, which excludes food and energy, was up 0.2%, also as expected. On a year-over-year basis, the PCE Price Index was up 2.7%, versus 2.6% in July, and the core PCE Price Index was up 2.9%, unchanged from July.
  • The key takeaway from the report is the lack of headline surprise for the inflation prints. That helped calm some of the market's angst about tariff pass-through being more demonstrable; therefore, it was better than feared, which qualifies in a relative sense as being good. The solid income and spending results were a bonus, befitting an economy that is still on a growth trajectory.
• The final University of Michigan Consumer Sentiment reading for September checked in at 55.1 (Briefing.com consensus: 55.4) versus the preliminary reading of 55.4. The final reading for August was 58.2. In the same period a year ago, the index stood at 70.1.
  • The key takeaway from the report is that expectations for the macroeconomy, including the labor market and business conditions, and personal finances receded. Monday's data slate will be limited to the 10:00 ET release of August Pending Home Sales (Briefing.com consensus 0.4%; prior -0.4%).

• Nasdaq Composite +16.4 YTD
• S&P 500 +13.0% YTD
• Russell 2000 +9.2% YTD
• Dow Jones Industrial Average +8.7% YTD
• S&P Midcap 400 +4.7% YTD