Stock Market Update

[BRIEFING.COM] The S&P 500 (+0.1%), Nasdaq Composite (-0.1%), and DJIA (-0.2%) now sit near their unchanged levels after a bumpy morning of trading. 

Stocks opened higher out of the gate in response to the January Employment Situation Report showing a solid increase in payrolls (130K; Briefing.com consensus: 68K). While the report is favorable for the U.S. growth outlook, it tempers the market's expectations of the next rate cut from the Fed. That development pushed treasury yields higher, though they have since pared losses throughout the session. 

The major averages have moved in tandem with fluctuations within the top-weighted information technology sector (+0.6%). The sector is now back in positive territory after its solid opening gains were quickly ceded and pushed the sector into negative territory. 

Software stocks remain under pressure, with the iShares GS Software ETF (IGV) down 3.3%. Microsoft (MSFT 403.74, -9.54, -2.31%) is a mega-cap laggard, though Apple (AAPL 279.71, +6.03, +2.20%) and NVIDIA (NVDA 191.95, +3.41, +1.81%) largely offset the weakness. 

The PHLX Semiconductor Index (+2.2%) also contributes to the sector's strength as memory storage names such as Sandisk (SNDK 601.83, +60.19, +11.11%) and Micron (MU 402.92, +29.67, +7.95%) rebound from yesterday's weakness. 

Mega-cap stocks elsewhere are generally weaker, with Alphabet (GOOG 312.33, -6.30, -1.98%) and Amazon (AMZN 204.04, -2.92, -1.41%) furthering their post-earnings weakness and pressuring the communication services (-1.2%) and consumer discretionary (-0.7%) sectors. The Vanguard Mega Cap Growth ETF is down 0.4%. 

The financials sector (-1.0%) is also lower today, facing pressure in a majority of its components. Financial services stocks remain under pressure amid concerns of AI disruption, while major banking names see a continuation of yesterday's weakness. 

Robinhood Markets (HOOD 75.08, -10.52, -12.28%) is one of the worst-performing S&P 500 names after missing revenue expectations, with a retreat in Bitcoin accentuating the weakness. 

Other cyclical sectors are putting together another session of solid gains. 

The energy sector (+2.5%) adds to its impressive start to the year (+23.3% year-to-date) as the price of oil increases $0.85 (+1.3%) to $64.81 per barrel. 

The materials sector (+1.0%) is another outperformer, with Smurfit Westrock plc (SW 50.44, +4.70, +10.26%) leading the advance despite an EPS miss. 

Generac (GNRC 213.75, +31.45, +17.25%) is another notable mover, leading strength in the industrials sector (+0.7%) despite also missing earnings estimates. 

Elsewhere, the defensive consumer staples sector (+1.8%) rebounds from a loss yesterday that followed a flat December retail sales report, while the utilities (+0.7%) and health care (+0.4%) sectors also trade higher.

Outside of the S&P 500, the Russell 2000 (-0.7%) and S&P Mid Cap 400 (-0.2%) have not been able to reclaim their opening gains. 

Despite early volatility tied to rates and tech, the major averages remain little changed as investors balance resilient economic data against a less accommodative Fed outlook.

Reviewing today's data:

• Weekly MBA Mortgage Applications Index -0.3%; Prior -8.9%
• January Nonfarm Payrolls 130K (Briefing.com consensus 68K); Prior was revised to 48K from 50K, January Nonfarm Private Payrolls 172K (Briefing.com consensus 60K); Prior was revised to 64K from 37K, January Unemployment Rate 4.3% (Briefing.com consensus 4.4%); Prior 4.4%, January Average Hourly Earnings 0.4% (Briefing.com consensus 0.3%); Prior was revised to 0.1% from 0.3%, January Average Workweek 34.3 (Briefing.com consensus 34.2); Prior 34.2
  • The key takeaway from the report is that it is a positive sign for the U.S. growth outlook, yet it may come with the cost of foregoing an additional rate cut by the Fed, at least in the near future.