Stock Market Update

[BRIEFING.COM] After some choppy action this morning, the S&P 500 (+0.6%), Nasdaq Composite (+0.5%), and DJIA (+0.4%) are a touch off of session highs early in the afternoon, with broadening strength beginning to take back a meaningful chunk of yesterday's retreat. The S&P 500 is now just 0.4% below its 50-day moving average (6,894.75), which it closed beneath yesterday. 

Stocks were little changed at the open despite an encouraging January CPI (0.2%; Briefing.com consensus 0.3%) and Core CPI (0.3%; Briefing.com consensus 0.3%) print. The market saw a modest boost to its future rate cut expectations, but stocks failed to garner a sharp buy-the-dip reaction this morning. 

Strength was mixed early on, with gains concentrated in more defensive sectors. To be fair, defensive sectors are still largely outperforming, with the utilities sector (+2.5%) widening its week-to-date gain to 7.0% while the health care sector (+1.5%) gets in on the action. Moderna (MRNA 42.50, +2.40, +5.97%) and Eversource Energy (ES 73.26, +2.94, +4.18%) are both near the top of their respective sectors' leaderboards following earnings. 

While the defensive sectors still boast some of the widest gains, strength has broadened significantly since the opening action. Advancers outpace decliners by a roughly 4-to-1 margin on the NYSE and a roughly 3-to-1 clip on the Nasdaq. Ten S&P 500 sectors now boast gains. 

After a notable retreat yesterday, the materials sector (+1.7%) is among the outperformers, with Newmont Corporation (NEM 126.24, +8.12, +6.87%) rising amid an increase in gold and silver prices while Albemarle (ALB 165.75, +6.82, +4.29%) moves higher following earnings. 

Similarly, the industrials sector (+1.2%) also takes back the bulk of its previous weakness. Courier stocks that traded lower yesterday amid fears of AI disruption are rebounding, with C.H. Robinson (CHRW 178.18, +10.40, +6.20%) and Expeditors Intl (EXPD 146.51, +5.95, +4.23%) among the outperformers. 

Even the financials sector (+0.2%) holds a modest gain as Robinhood Markets (HOOD 76.09, +4.97, +6.99%) attempts to rebound from its post-earnings slide while Coinbase Global (COIN 165.66, +24.57, +17.41%) rockets higher despite missing earnings estimates of its own.

Not to be outdone, the top-weighted information technology sector (+0.4%) houses a few notable earnings moves of its own in Applied Materials (AMAT 357.99, +29.60, +9.01%) and Arista Networks (ANET 146.14, +11.02, +8.16%). The positive reaction to solid earnings reports is a good sign for the sector, as valuation concerns have caused many big tech names to trade lower recently despite solid results. 

Perhaps even more encouraging is the rebound in software stocks that sees the iShares GS Software ETF (IGV) 2.7% higher. 

However, the broader sector sports just a modest gain amid some lingering mega-cap weakness, with NVIDIA (NVDA 184.25, -2.69, -1.44%) a notable laggard. 

Alphabet (GOOG 306.77, -2.60, -0.84%) is another laggard, weighing on the communication services sector (-0.2%).

Despite some sluggishness across the market's weightiest components, the session reflects a constructive rebound attempt, with improving breadth and sector participation suggesting yesterday's selloff is being actively faded.

Reviewing today's data:

• January CPI 0.2% (Briefing.com consensus 0.3%); Prior 0.3%, January Core CPI 0.3% (Briefing.com consensus 0.3%); Prior 0.2%
  • The key takeaway from the report is that it showed some encouraging disinflation on a year-over-year basis, which the market will perceive as an opening for the Fed to consider additional rate cuts even with GDP growth running above potential.