Stock Market Update

[BRIEFING.COM] The major averages have recovered considerably from their morning lows, with the S&P 500 (-0.3%), Nasdaq Composite (-0.3%), and DJIA (flat) trading mostly lower with modest losses just after midday. The improvement has extended beneath the surface, as the S&P 500 Equal Weighted Index (+0.2%) has returned to positive territory and advancing and declining issues are now nearly even at both the NYSE and Nasdaq.

Some easing in oil prices and Treasury yields has accompanied the recovery. WTI crude is up $1.10 (+1.1%) at $101.15 per barrel after briefly topping $104 earlier in the session. The early surge followed the shutdown of Saudi Arabia's East-West pipeline, along with the postponement of a planned meeting between Gulf states and Iran regarding shipping through the Strait of Hormuz. Crude has since pulled sharply off its highs as some geopolitical optimism emerged after President Trump said Iran wants to reach an agreement quickly and that the U.S. is open to talks.

The 10-year note yield has also reversed lower, down three basis points to 4.94% after eclipsing 5.0% earlier in the session.

Semiconductor stocks remain a notable exception to the broader improvement. The information technology sector (-1.3%) has narrowed its loss, but the PHLX Semiconductor Index (-5.1%) remains sharply lower as a renewed debate over AI safety raises concerns that development of increasingly powerful models could face constraints. Those concerns have weighed heavily on chipmakers and semiconductor-linked infrastructure names, including Vertiv (VRT 237.51, -19.55, -7.61%), contributing to the industrials sector's (-1.4%) underperformance.

OpenAI CEO Sam Altman added another wrinkle to the AI story by indicating that an IPO this year would be ill-advised.

Software and cybersecurity stocks are moving sharply in the opposite direction. The iShares GS Software ETF is up 5.2%, with cybersecurity names among the strongest performers as the AI safety discussion has also drawn attention to potential demand for protection against increasingly autonomous cyber threats.

Strength in Meta Platforms (META 663.53, +15.50, +2.39%) and Alphabet (GOOG 343.90, +8.45, +2.52%) has meanwhile helped propel the communication services sector (+2.3%) to the top of the sector standings. The health care (+1.3%) and consumer staples (+1.3%) sectors are other standouts, while the financials sector (+0.2%) has also edged into positive territory.

The utilities sector (-1.1%) remains among the laggards.

Attention remains on developments surrounding the Strait of Hormuz and their implications for oil prices and inflation, while Wednesday's FOMC decision looms ahead as the week's key scheduled catalyst.

There was no economic data of note this morning.