Stock Market Update

[BRIEFING.COM] The major averages are holding modest gains around midday after a volatile morning that saw stocks recover from a mixed opening before surrendering some of their advance. The S&P 500 (+0.4%), Nasdaq Composite (+0.2%), and DJIA (+1.0%) are all higher, with buying interest extending beyond the mega-cap stocks that led yesterday's rebound. The Russell 2000 (+1.6%) and S&P Mid Cap 400 (+0.8%) are outperforming, reflecting stronger participation among smaller stocks.

Technology stocks have experienced particularly choppy trading after initially giving back much of yesterday's advance. The PHLX Semiconductor Index (+0.7%) opened with losses approaching 2%, briefly erasing the entirety of yesterday's gain before staging a sizable recovery into positive territory. The information technology sector (flat) has similarly recovered from its opening decline, although it continues to lag the broader market.

However, the communication services sector (-0.7%) is now the weakest performer, weighed down by losses in mega-cap names Meta Platforms (META 690.70, -14.74, -2.09%) and Alphabet (GOOG 337.64, -2.52, -0.74%). Netflix (NFLX 69.72, -0.12, -0.18%) is trading near its flat line ahead of its earnings report this afternoon.

The broader market has found support from a retreat in crude oil prices and some easing in Treasury yields. WTI crude is down $0.70 (-0.7%) to $102.96 per barrel after briefly topping $110 this morning. The sharp reversal followed unconfirmed reports from Israeli media that a compromise proposal aimed at easing tensions between the U.S. and Iran had received preliminary approval from both sides. Oil subsequently recovered somewhat from its session lows following comments attributed to an unnamed official disputing reports that an agreement was close. The energy sector (-0.4%) remains modestly lower amid the volatility.

Meanwhile, the 10-year note yield is down two basis points to 5.12%, providing some relief to rate-sensitive areas of the market. The real estate sector (+1.7%) is among the strongest performers, while the financials (+1.0%) and consumer discretionary (+0.7%) sectors are also showing solid gains. Homebuilders are participating in the advance, with the iShares U.S. Home Construction ETF up 2.5%.

The health care sector (+2.2%) leads the S&P 500 by a considerable margin, supported by pronounced strength in pharmaceutical and biotechnology stocks. The iShares Nasdaq Biotechnology ETF is up 2.7%, while Eli Lilly (LLY 1293.66, +53.32, +4.30%) and Biogen (BIIB 243.75, +10.27, +4.40%) are among the index's top performers after reaching fresh 52-week highs, including a new all-time high for Eli Lilly.

Overall, six S&P 500 sectors are trading higher, with several others oscillating around their flat lines. Advancers outpace decliners by roughly a 5-to-2 margin on both the NYSE and Nasdaq, underscoring the relatively broad participation despite the uneven sector performance.

Earnings reports have also produced some notable moves in individual stocks. Equifax (EFX 174.52, +15.94, +10.06%) is the S&P 500's best-performing component after beating quarterly earnings expectations and issuing in-line fourth-quarter guidance, while 3M (MMM 172.88, +10.86, +6.71%) is rallying after topping estimates and raising its full-year EPS outlook. Conversely, GE Aerospace (GE 298.72, -12.56, -4.03%) and General Motors (GM 76.17, -6.58, -7.95%) are among the worst performers despite both reporting better-than-expected results. GE's weaker free cash flow conversion and margin concerns have overshadowed its higher guidance, while GM's unchanged full-year adjusted EBIT midpoint has disappointed investors despite strong operating results.

Despite pulling back from their session highs, the major averages have maintained gains amid an encouraging shift in the market's underlying dynamics. Semiconductor stocks have staged a meaningful recovery from intense early selling pressure, while buying interest has broadened considerably compared with yesterday's narrowly led advance. The outperformance of small- and mid-cap stocks, alongside favorable market breadth, suggests that the recovery is finding support beyond the technology stocks that dominated yesterday's trading.

Reviewing today's data:

• Total housing starts were down 5.2% month-over-month in September to a seasonally adjusted annual rate of 1.221 million (Briefing.com consensus: 1.305 million) following an upwardly revised 1.288 million (from 1.275 million) in August. Building permits were down 0.2% month-over-month to a seasonally adjusted annual rate of 1.400 million (Briefing.com consensus: 1.390 million).
  • The key takeaway from the report is that there was no growth in permits for single-unit dwellings in any region. Building permits are a leading indicator, and the lack of growth is a reflection of the constraints builders and homebuyers alike face from higher financing costs.
• Sep Building Permits 1400K (Briefing.com consensus 1390K; Prior 1403K revised from 1394K)
• Sep Pending Home Sales -7.3% (Briefing.com consensus 0.1%; Prior 0.3%)