Stock Market Update

[BRIEFING.COM ]Another day of considerable weakness in tech and mega-cap names has the S&P 500 (-1.0%), Nasdaq Composite (-2.2%), and DJIA (-0.1%) moving lower despite mixed strength in the broader market.

Notably, the S&P 500 has slipped below its 50-day moving average (6,878.02) after finding support above it for most of the session. Similar to yesterday's action, losses have widened across tech names and have begun to permeate into other pockets of the market, eroding the solid early gain of the DJIA that saw it test yesterday's all-time high level. 

[BRIEFING.COM] Additionally, a sharp move lower in Bitcoin below $73,000 shortly after midday coincides with a recent uptick in selling pressure across stocks. 

The information technology sector (-2.9%) is down sharply, once again facing pressure on multiple fronts. 

Advanced Micro Devices (AMD 200.50, -41.61, -17.19%) is the worst-performing S&P 500 name despite topping earnings estimates and issuing upside guidance. 

Memory storage names such as Micron (MU 367.42, -52.02, -12.40%) and Sandisk (SNDK 600.33, -95.18, -13.68%) also face sharp retreats, while NVIDIA (NVDA 172.20, -8.14, -4.51%) is a mega-cap laggard. All told, the PHLX Semiconductor Index is down 6.1%, cutting its year-to-date gain roughly in half. 

Microsoft (MSFT 413.48, +2.27, +0.55%) has managed a modest gain, but pressure across software names keeps the iShares GS Software ETF (IGV 82.63, -2.76, -3.23%) firmly lower. 

Weakness across other mega-cap names has the communication services (-2.2%) and consumer discretionary (-1.6%) now moving sharply lower as well. The Vanguard Mega Cap Growth ETF is down 2.2%. 

However, like yesterday's action, there are some clear beneficiaries from the rotation out of tech, with solid gains in other pockets of the market pushing the S&P 500 Equal Weight Index (+0.5%) past the market-weighted S&P 500 (-1.0%). 

The energy sector (+1.8%) holds the widest gain amid a notable intraday increase in oil prices. Axios reported that the U.S. has rejected Iran's demand to shift nuclear talks, with the diplomatic path now hitting a deadlock. 

The consumer staples (+1.4%) and materials (+1.1%) are also once again near the top of the leaderboard, expanding upon solid gains yesterday. 

Meanwhile, the health care sector (+1.3%) also sports a solid gain, with Eli Lilly (LLY 1094.58, +91.12, +9.08%) and Amgen (AMGN 367.59, +29.00, +8.56%) soaring following earnings beats. 

Outside of the S&P 500, the Russell 2000 (-1.9%) and S&P Mid Cap 400 (-0.1%) now both sit lower after spending the morning mixed. 

Overall, the early afternoon trade continues to reflect a pronounced rotation away from growth and momentum, with strength in select defensive and cyclical pockets failing to fully offset the drag from tech and mega-cap weakness. As selling pressure broadens and key technical levels come into focus, the market remains on fragile footing into the next round of mega-cap earnings. 

Reviewing today's data:

• Weekly MBA Mortgage Applications Index -8.9%; Prior -8.5%
• January ADP Employment Change 22K (Briefing.com consensus 43K); Prior was revised to 37K from 41K
• January S&P Global U.S. Services PMI - Final 52.7; Prior 52.5
• January ISM Non-Manufacturing Index 53.8% (Briefing.com consensus 53.7%); Prior was revised to 53.8% from 54.4%
  • The key takeaway from the report is that activity in the services sector grew at a steady pace in January at the same time prices paid for materials and services increased.