Stock Market Update

[BRIEFING.COM] Stocks are poised to end a record-setting week on a lower note, with rising oil prices and Treasury yields putting broad pressure on the market while tech and mega-cap names face selling pressure after their recent rally. The S&P 500 (-0.9%), Nasdaq Composite (-1.2%), and DJIA (-0.9%) have spent the session in a relatively tight range.

Crude oil is currently $3.92 (+3.9%) higher at $105.09 per barrel amid concerns that the U.S. could resume military operations against Iran after the summit between President Trump and Chinese President Xi concluded without any meaningful policy changes.

The surge in oil prices coincides with a jump in Treasury yields, with the 10-year note yield up 13 points to 4.59%. Inflation concerns are now back at the forefront of the market's attention, with the CME FedWatch tool now assigning a roughly 60% probability to a rate hike in January.

As a result, growth stocks are underperforming today. Semiconductor names are pulling back after a recent surge, with the PHLX Semiconductor Index down 3.0%. Intel (INTC 107.82, -8.11, -7.00%) is the worst-performing stock in the sector, while NVIDIA (NVDA 227.77, -7.97, -3.38%) is a mega-cap laggard.

However, software names are somewhat offsetting the weakness, with the iShares GS Software ETF up 1.2%. Microsoft (MSFT 424.20, +14.77, +3.61%) is a "magnificent seven" standout after CNBC reported that Pershing Square has built a position in the company.

Elsewhere, the consumer discretionary sector (-1.8%) remains near session lows, with Tesla (TSLA 423.99, -19.31, -4.36%) facing considerable weakness while Ford Motor (F 13.44, -1.04, -7.22%) pulls back from recent highs.

Homebuilders are underperforming amid the spike in interest rates, which weighs on the utilities (-1.9%) and real estate (-1.3%) sectors as well.

Meanwhile, the materials sector (-2.5%) holds the widest loss, facing broad weakness and pressure across precious metals names such as Newmont Corporation (NEM 108.96, -7.37, -6.34%) as silver slides 10%.

Outside of the S&P 500, the Russell 2000 (-2.3%) and S&P Mid Cap 400 (-1.5%) are underperforming, highlighting the market's risk-off tone.

Overall, today's session marks a notable shift from the AI-driven momentum that fueled the market's recent record run, as rising oil prices and renewed inflation concerns sparked broad profit-taking across growth and cyclical areas alike. Even with some resilience in software stocks, the sharp rise in Treasury yields and increasingly hawkish rate expectations weighs heavily on risk appetite.

Reviewing today's data:

• Industrial production increased 0.7% month-over-month in April (Briefing.com consensus: 0.2%) following an upwardly revised 0.3% decline (from -0.5%) in March. The capacity utilization rate was 76.1% (Briefing.com consensus: 75.7%), up from 75.7% in March. Total industrial production was up 1.4% year-over-year. The capacity utilization rate was 3.3 percentage points below its long-run average.
  
  • The key takeaway from the report is that it was underpinned by solid manufacturing output that was led by the production of durables. Excluding motor vehicles and parts, manufacturing output was up 0.3% month-over-month.
• May Empire State Manufacturing index checked in at 19.6 (Briefing.com consensus 6.2), from a prior level of 11.0.