Stock Market Update

[BRIEFING.COM] The stock market has shown a rather impressive display of resilience as the S&P 500 (+0.4%), Nasdaq Composite (-0.2%), and DJIA (+1.8%) sit mostly higher this afternoon despite considerable weakness across tech stocks.

Several components of the information technology sector (-1.5%) are sharply lower after reporting earnings yesterday after the close, with weakness spilling over to related names. Most notably, Broadcom (AVGO 415.13, -64.10, -13.38%) is leading semiconductor stocks lower after the company failed to impress with its next quarter guidance. The PHLX Semiconductor Index (-2.1%) is firmly lower, but investors have already stepped in on the weakness, as the index was down nearly 6% this morning.

In addition to tech stocks rising from their worst levels, the major averages are supported by exceptional participation in the broader market, suggesting some of the selling across tech has resulted in some rotational buying elsewhere.

Ten S&P 500 sectors trade higher, and advancers outpace decliners by a nearly 2-to-1 ratio on both the NYSE and the Nasdaq.

The health care sector (+3.0%) currently holds the widest gain as nearly all of its components trade higher, including its largest constituent, Eli Lilly (LLY 1132.51, +53.73, +4.98%), and the Dow components UnitedHealth (UNH 396.80, +19.80, +5.25%) and Merck (MRK 119.24, +4.54, +3.96%).

The financials sector (+2.8%) holds a similar gain, with several outperforming Dow components of its own in Goldman Sachs (GS 1093.84, +52.82, +5.07%) and American Express (AXP 313.55, +12.98, +4.32%).

Additionally, asset manager names are sharply higher after the group lagged yesterday amid renewed fears of increased redemption requests.

The communication services sector (+2.1%) rounds out the top performers, supported by a solid gain in Alphabet (GOOG 368.09, +12.41, +3.49%) that follows two consecutive sessions of weakness after the company announced an $84.75 billion equity capital raise to expand AI infrastructure and compute.

For now, today's session highlights a healthy rotation beneath the surface rather than a deterioration in risk appetite. Strong participation across financials, health care, and other non-tech sectors has largely offset semiconductor weakness, resulting in a fresh record high for the DJIA and keeping the other major indices near their own record highs despite considerable pressure on one of the market's most important leadership groups.

Reviewing today's data:

• Q1 Productivity-Rev. 0.3% (Briefing.com consensus 0.8%); Prior 0.8%, Q1 Unit Labor Costs-Rev. 1.8% (Briefing.com consensus 2.3%); Prior 2.3%
  • The key takeaway from the report is the understanding that productivity has picked up nicely from a year ago (+2.8%), while unit labor costs (+0.5%) have come down, tempering concerns about labor-based inflation pressures.
• Weekly Initial Claims 225K (Briefing.com consensus 216K); Prior was revised to 212K from 215K, Weekly Continuing Claims 1.777 mln; Prior was revised to 1.785 mln from 1.786 mln
  • The key takeaway from the report is that there isn't any concerning key takeaway. Granted, initial jobless claims—a leading indicator—were up from the prior week, but they remain at levels that are consistent with an otherwise solid labor market.