Stock Market Update

[BRIEFING.COM] The major averages are retreating from yesterday's record highs, with the S&P 500 (-0.6%), Nasdaq Composite (-1.0%), and DJIA (-0.8%) hovering near session lows early in the afternoon. Tech and mega-cap names are under pressure, while a spike in oil prices weighs on other pockets of the market.

Crude oil is currently up $1.93 (+2.1%) to $95.69 per barrel following reports this morning that the U.S. and Iran exchanged fresh strikes, further testing the limits of the tenuous ceasefire. Treasury yields are higher across the curve.

The energy sector (+2.3%) holds the widest gain across S&P 500 sectors, while the defensive consumer staples (+1.2%) and health care (+1.1%) sectors also garner some buying interest amid the retreat in growth stocks today.

To that end, the top-weighted information technology sector (-1.6%) is today's worst performer after driving this week's push further into record territory. Chipmakers are still providing solid leadership with the PHLX Semiconductor Index up 1.1%, though NVIDIA (NVDA 216.08, -6.74, -3.02%) is a laggard amid a tough day for mega-cap stocks.

Microsoft (MSFT 424.74, -16.57, -3.75%) holds a similar loss, adding to the sustained pressure across software names, which has the iShares GS Software ETF down 4.4% after a 2.8% slide yesterday.

Amazon (AMZN 248.46, -8.06, -3.14%) is also under pressure, providing poor leadership for the consumer discretionary sector (-1.5%).

Elsewhere in the sector, Ulta Beauty (ULTA 473.14, -21.73, -4.39%) moves lower despite a relatively strong earnings report.

The financials sector (-1.1%) rounds out the worst-performing S&P 500 sectors, with considerable weakness across commercial services names such as Global Payments (GPN 66.64, -7.40, -9.99%) and Block (XYZ 69.75, -4.40, -5.93%).

Outside of the S&P 500, the Russell 2000 (-1.5%) lags amid the spike in Treasury yields, while the S&P Mid Cap 400 (-0.2%) holds a more modest loss.

Overall, today's weakness appears more reflective of profit-taking and geopolitical uncertainty than a wholesale shift in market sentiment. While higher oil prices and yields have pressured growth-oriented areas, continued leadership from semiconductor stocks suggests investors remain willing to buy select pockets of strength beneath the surface. At the same time, some of the weakness across mega-cap technology stocks may reflect investors raising cash ahead of several notable upcoming technology IPOs, adding another headwind for the market's largest companies.

Reviewing today's data:

• Weekly MBA Mortgage Applications Index -2.5%; Prior -8.5%
• May ADP Employment Change 122K (Briefing.com consensus 110K); Prior was revised to 105K from 109K
• May S&P Global U.S. Services PMI - Final 50.7; Prior 50.9
• April Factory Orders 4.8% (Briefing.com consensus 3.5%); Prior was revised to 1.8% from 1.5%
  • The key takeaway from the report is that the headline numbers masked a weak month for business spending, evidenced by the 1.0% decline in nondefense capital goods orders, excluding aircraft. To be fair, that decline followed a very strong 3.8% increase in March, so it could just be a natural pullback after a large increase.
• May ISM Non-Manufacturing Index 54.5% (Briefing.com consensus 53.6%); Prior 53.6%
  • The key takeaway from the report is the understanding that activity for the country's largest business sector picked up pace in May, notwithstanding higher prices that were reflected in the highest average 12-month reading (68%) since April 2023.