Stock Market Update

[BRIEFING.COM] The S&P 500 (-0.5%), Nasdaq Composite (-0.8%), and DJIA (-0.4%) trade lower just before midday as higher oil prices and Treasury yields continue to pressure equities. Both crude oil prices and U.S. Treasury yields have eased from their earlier highs, helping the major averages recover from their opening lows, though all three remain firmly in negative territory.

Six S&P 500 sectors trade lower, with weakness concentrated in technology and other growth stocks. The PHLX Semiconductor Index (-2.2%) is a notable source of pressure, weighing on the information technology sector (-0.9%). The consumer discretionary sector (-1.6%) holds an even wider loss as Tesla (TSLA 358.91, -9.04, -2.46%) gives back a portion of yesterday's gains, while broader mega-cap weakness has left the Vanguard Mega Cap Growth ETF down 0.8%.

Part of the pressure on growth stocks comes as investors price in an increased likelihood of a rate hike at this month's FOMC meeting. The CME FedWatch Tool now assigns a 66.2% probability to a 25-basis-point rate hike at the September 16 meeting, up sharply from 39.6% a week ago.

The weakness in mega-cap and other growth stocks has been accompanied by relative strength in more defensive areas of the market. The consumer staples (+0.9%), health care (+0.7%), and utilities (+0.7%) sectors are among the top performers, while the energy sector (+0.9%) is also a standout as higher crude oil prices provide support for the group.