Stock Market Update

[BRIEFING.COM] The S&P 500 (-0.3%), Nasdaq Composite (-0.6%), and DJIA (+0.1%) finished mostly lower today as mega-cap and tech names saw their recent rebound efforts modestly stalled, while early strength in the broader market succumbed to some afternoon selling pressure. 

The DJIA's modest gains were enough to secure record highs for the third consecutive session. 

While sector strength tilted positive for most of the session, it was eroded somewhat in the afternoon, with just five S&P 500 sectors finishing higher.  Losses were relatively modest across the six sectors that finished lower, though weakness in some of the market's weightiest names pressured the major averages. 

The communications services sector (-0.8%) finished with the widest loss as Alphabet (GOOG 318.63, -5.77, -1.78%) and Meta Platforms (META 670.72, -6.65, -0.98%) both finished lower. 

The financials sector (-0.8%) finished similarly as major banking and financial services names lagged today. 

Meanwhile, the consumer staples sector (-0.7%) faced a combination of weakness from this morning's economic data and earnings releases.  Walmart (WMT 126.70, -2.32, -1.80%) and Costco (COST 971.23, -26.36, -2.64%) finally faced some pressure after an exceptional start to the year following a flat December retail sales report (Briefing.com consensus 0.4%). 

Coca-Cola (KO 76.82, -1.16, -1.48%) finished modestly lower after beating EPS estimates but missing on revenues. 

The top-weighted information technology sector (-0.6%) finished at session lows after spending the first half of the session with modest gains. Datadog (DDOG 129.67, +15.66, +13.74%) was an earnings standout, and software names tracked higher for most of the session, but the iShares GS Software ETF (IGV) finished just 0.4% higher after holding a significantly higher gain. 

Microsoft (MSFT 413.27, -0.33, -0.08%) was unable to maintain its early strength, while NVIDIA (NVDA 188.54, -1.50, -0.79%) and Apple (AAPL 273.68, -0.94, -0.34%) added to the day's mega-cap weakness that saw the Vanguard Mega Cap Growth ETF finish 0.4% lower. 

The PHLX Semiconductor Index (-0.7%) finished even lower, pressured by sharp retreats across memory storage names such as Western Digital (WDC 262.56, -23.43, -8.19%) and Sandisk (SNDK 541.64, -41.76, -7.16%). 

While growth stocks largely underwhelmed today, there were a few defensive and cyclical pockets of the market that outperformed. 

The utilities sector (+1.6%) finished with the widest gain as all but one of its components finished higher. Vistra Corp. (VST 159.58, +6.61, +4.32%) led the advance after receiving an upgrade to Buy from Hold from Jefferies. 

Meanwhile, the real estate sector (+1.4%) traded higher as the House passed a bipartisan bill to reduce regulations and increase housing supply. 

The materials sector (+1.3%) also charted a gain wider than 1.0% due to strong performances from chemical stocks. 

Though the consumer discretionary sector (+0.5%) finished with only about half of its earlier strength, it still notched a solid gain due to solid post-earnings performances from Marriott (MAR 359.35, +28.14, +8.50%) and Hasbro (HAS 104.00, +7.24, +7.48%), along with strength in its homebuilder components. 

Amazon (AMZN 206.90, -1.82, -0.87%) traded modestly higher for much of the session but was unable to secure its first higher finish following its earnings report last Thursday afternoon. 

Outside of the S&P 500, the Russell 2000 (-0.3%) and S&P Mid Cap 400 (-0.1%) also ceded their early gains. 

All told, today's session started as a modest extension of the recent rebound effort, and while select pockets of the market finished with nice gains, weakness in mega-cap and tech spaces resulted in a mostly lower finish for the major averages. Action at the index level was still subdued as the market awaited its next catalyst in the form of more earnings and tomorrow's release of the January employment situation report. 

U.S. Treasuries registered gains in the overnight session, comforted by the calm seen in Japan's bond market despite speculation that the LDP's commanding victory in last weekend's snap election could stoke additional fiscal stimulus. Those gains persisted into today's cash session, courtesy mostly of a weak retail sales report for December and the recognition that employment costs moderated in Q4. The 2-year note yield settled down three basis points to 3.45%, and the 10-year note yield settled down five basis points to 4.15%. 

• S&P Mid Cap 400: +8.6% YTD
• Russell 2000: +8.0% YTD
• DJIA: +4.4% YTD
• S&P 500: +1.4% YTD
• Nasdaq Composite: -0.6% YTD

Reviewing today's data:

• January NFIB Small Business Optimism 99.3; Prior 99.5
• December Retail Sales 0.0% (Briefing.com consensus 0.4%); Prior 0.6%, December Retail Sales, ex-auto 0.0% (Briefing.com consensus 0.4%); Prior was revised to 0.4% from 0.5%
  • The key takeaway from the report is that spending on goods was down across most discretionary categories following some decent-sized gains in November. That will foment some concern about consumer spending fatigue at the end of last year, which of course included the holiday shopping period.
• Q4 Employment Cost Index 0.7% (Briefing.com consensus 0.8%); Prior 0.8%
  • The key takeaway from the report is that there was some moderation in employment costs on a year-over-year basis that will help temper inflation worries.
• December Import Prices 0.1%
• December Import Prices ex-oil 0.4%
• December Export Prices 0.3%
• December Export Prices ex-ag. 0.3%
• November Business Inventories 0.1% (Briefing.com consensus 0.2%); Prior was revised to 0.2% from 0.3%