Stock Market Update

[BRIEFING.COM] The stock market posted a solid start to the week, with the S&P 500 (+0.5%), Nasdaq Composite (+0.4%), and DJIA (+0.6%) capturing similar gains amid relatively broad strength and notable mega-cap leadership.

Eight S&P 500 sectors posted gains despite mixed breadth figures throughout the session, with mega-cap performance dictating both the strongest and weakest performing sectors today. 

The communication services sector (+1.5%) posted the widest gain, with Meta Platforms (META 672.36, +13.60, +2.06%) and Alphabet (GOOG 333.59, +5.16, +1.57%) providing strong leadership. Meta is one of the four "magnificent seven" names set to report earnings this week. The stock, which was a mega-cap standout last week, was further supported by Rothschild & Co Redburn upgrading the stock to Buy from Neutral with a target price of $900.

Apple (AAPL 255.41, +7.37, +2.97%) and Microsoft (MSFT 470.28, +4.33, +0.93%) are also set to report earnings and also put together solid performances today. Their combined strength helped the top-weighted information technology sector (+0.8%) finish near the top of the leaderboard despite a sluggish day from chipmakers that saw the PHLX Semiconductor Index finish 0.4% lower.  Intel (INTC 42.49, -2.58, -5.72%) was a laggard, continuing its post-earnings slide, while NVIDIA (NVDA 186.36, -1.31, -0.70%) also finished lower. 

Tesla (TSLA 435.20, -13.86, -3.09%) rounds out the four "mag seven" reporters for the week, though it traded sharply lower today, falling below its 50-day moving average (442.39). The stock was not the only laggard in the consumer discretionary sector (-0.7%), which moved lower as about half of its components faced losses. 

Even with Tesla and Nvidia's losses, the Vanguard Mega Cap Growth ETF finished 0.7% higher, marking the second consecutive session of mega-cap outperformance versus small caps and cyclicals—an outcome that runs counter to the prevailing trend for most of the year.

Several cyclical sectors still captured gains, though they were largely modest and subject to some late-session profit taking. 

The financials sector (+0.7%) was supported by broad strength and leadership from insurance names such as American Intl (AIG 73.81, +1.50, +2.07%). Meanwhile, the materials sector (+0.3%) gave up the bulk of its early gain, though Freeport-McMoRan (FCX 61.17, +0.76, +1.26%) and Newmont Corporation (NEM 125.90, +1.59, +1.28%) captured solid gains as gold and silver both charted fresh record highs today amid lingering geopolitical tensions. 

Outside of the S&P 500, the Russell 2000 (-0.4%) and S&P Mid Cap (-0.1%) traded lower again today, unable to regain earlier momentum after stalling alongside the broader market last week. 

Though today's session was a bit of an outlier compared to most of this year, solid mega-cap leadership helped the major averages start the week on a positive note. The performance of the mega-cap group, particularly those set to report earnings later this week, will be especially consequential in sustaining momentum. With the S&P 500 and DJIA both sitting just 0.5% below their respective all-time highs, the path to fresh records will likely hinge on upside guidance and clear evidence that massive AI-related capital spending can translate into durable returns on investment rather than longer-dated promises.

U.S. Treasuries started the week on a modestly higher note, with the 10-year note finishing a bit ahead of other tenors. The 2-year note yield settled down one basis point to 3.59%, and the 10-year note yield settled down three basis points to 4.21%. 

• Russell 2000: +7.2% YTD
• S&P Mid Cap 400: +5.4% YTD
• DJIA: +2.8% YTD
• Nasdaq Composite: +1.6% YTD
• S&P 500: +1.5% YTD

Reviewing today's data:

• Durable goods orders jumped 5.3% month-over-month in November (Briefing.com consensus: 1.1%) following an upwardly revised 2.1% decline (from -2.2%) for October. Excluding transportation, durable goods orders rose 0.5% month-over-month (Briefing.com consensus: 0.3%) following a downwardly revised 0.1% increase (from 0.2%) for October.
  
  • The key takeaway from the report is that it showed good business spending activity, evidenced by the 0.7% month-over-month jump in nondefense capital goods orders excluding aircraft.