Stock Market Update

[BRIEFING.COM] The  major averages are mostly higher just after midday, with technology and select mega-cap stocks leading a rebound from last week's sharp selloff. The S&P 500 (+0.6%) and Nasdaq Composite (+1.4%) are holding solid gains, while the DJIA (flat) trails as buying interest remains concentrated in some of the market's largest companies. The S&P 500 has also reclaimed its 50-day moving average (7,705), although participation beneath the surface remains relatively weak.

Much of today's advance reflects investors stepping back into semiconductor and other AI-related stocks following last week's retreat, which was driven in part by concerns about the reliance on debt to finance the massive AI infrastructure buildout. The PHLX Semiconductor Index (+2.6%) is attempting to snap an eight-session losing streak, providing a substantial boost to the top-weighted information technology sector (+1.6%). Memory-related stocks are among the semiconductor group's outperformers, while Intel (INTC 93.18, +3.32, +3.70%) is also moving sharply higher after JPMorgan upgraded the stock to Neutral from Underweight and raised its price target to $85.

Software stocks are also participating in the rebound, with the iShares GS Software ETF (+1.7%) moving firmly higher and Datadog (DDOG 263.42, +16.31, +6.60%) standing out as the S&P 500's top-performing component.

The Vanguard Mega Cap Growth ETF (+1.4%) further underscores the strength among the market's largest growth-oriented companies.

The consumer discretionary sector (+2.8%) is leading the sector leaderboard, although its sizable gain masks considerable weakness among its individual components. Amazon (AMZN 262.92, +12.92, +5.17%) and Tesla (TSLA 369.15, +14.43, +4.07%)) are driving much of the advance, while roughly two-thirds of the sector's other components trade lower. Amazon is benefiting in part from Morgan Stanley naming the stock a Top Pick and raising its price target to $350 from $335, while Tesla is moving higher ahead of its earnings report Wednesday after the close.

Homebuilders are among the notable areas of weakness within the consumer discretionary sector, with the iShares U.S. Home Construction ETF (-1.2%) giving back some of last week's rebound as Treasury yields move higher.

The 10-year note yield, which initially moved lower this morning, has reversed course and is now up five basis points to 5.15%. Meanwhile, crude oil prices have recovered much of their sharper overnight decline and are now only modestly lower, providing limited additional relief from the elevated energy prices that have recently weighed on the market.

The communication services sector (+0.3%) is the only other S&P 500 sector in positive territory, supported by a gain in Alphabet (GOOG 340.82, +3.91, +1.16%). The remaining eight sectors are trading lower, with the rate-sensitive utilities (-1.7%) and real estate (-1.2%) sectors facing the steepest declines.

The divergence between the major averages and the broader market is particularly notable. The S&P 500 Equal Weight Index (-0.2%) remains in negative territory despite the cap-weighted index's solid advance, reflecting the relatively narrow nature of today's leadership. Decliners outnumber advancers by nearly a 2-to-1 margin on the NYSE, although advancers maintain a slim edge on the Nasdaq.

There are some encouraging signs outside the largest companies, however, as the Russell 2000 (+0.5%) maintains a respectable gain and the S&P Mid Cap 400 (+0.1%) trades modestly higher. Their performance suggests that buying interest is not entirely confined to mega-cap stocks, even as overall participation remains mixed.

On the earnings front, Fifth Third (FITB 50.74, +0.36, +0.72%) is trading higher after reporting better-than-expected earnings despite a revenue miss, supported by improving profitability and expectations for further operating leverage following its Comerica integration. Steelmaker Cleveland-Cliffs (CLF 14.16, +2.04, +16.83%), which is not an S&P 500 component, is also posting a sizable gain after topping earnings expectations and projecting adjusted EBITDA exceeding $4 billion in 2027.

Overall, today's action reflects a meaningful rebound in semiconductor and mega-cap growth stocks, helping the S&P 500 recover an important technical level. However, the weakness in the equal-weighted index, losses across eight sectors, and uneven market breadth suggest that the recovery has yet to translate into a broadly supported advance.

Reviewing today's data: 

• Oct NAHB Housing Market Index 29 (Briefing.com consensus 31; Prior 32)