Stock Market Update

[BRIEFING.COM] The major averages are mostly higher at midday as a sharp retreat in crude oil and renewed strength across technology stocks provide support, although some caution remains evident ahead of this afternoon's highly anticipated FOMC decision. The S&P 500 (+0.3%) and Nasdaq Composite (+0.7%) trade higher, while the DJIA (-0.1%) remains just below its flat line.

Oil's reversal from yesterday's surge has provided an important tailwind. WTI crude is down $3.23 (-3.1%) to $102.61 per barrel after CNBC reported that the Saudi pipeline damaged in recent Houthi attacks is expected to restart operations within days. The pullback has weighed heavily on the energy sector (-1.9%), which sits near the bottom of the sector standings after leading the market higher yesterday.

Technology stocks have taken over the leadership role, with the information technology sector (+0.8%) supported by a 1.7% gain in the PHLX Semiconductor Index. Chip stocks are extending their rebound from Monday's sharp selloff as some of the initial concerns surrounding calls to slow the pace of frontier AI development appear to be easing. Advanced Micro Devices (AMD 522.30, +18.10, +3.59%) is among the notable gainers, while Intel (INTC 101.70, +4.56, +4.70%) is also sharply higher after Reuters reported that SK hynix Inc. (SKHY 177.70, +2.87, +1.64%) is in exploratory talks with the company over potential U.S. chip fabrication capacity at Intel's delayed Ohio project.

Broader mega-cap strength has provided another source of support, lifting the Vanguard Mega Cap Growth ETF 0.8%.

The industrials sector (+0.8%) is another standout, helped in part by semiconductor-related strength across AI infrastructure plays. That has outweighed pronounced weakness across freight names after J.B. Hunt Transport (JBHT 236.13, -36.92, -13.52%) warned that higher fuel costs and a lag in passing those costs through to customers will create a meaningful third-quarter earnings headwind.

Aside from the energy sector, the financials sector (-0.8%) is the only other S&P 500 sector in negative territory, with banking stocks under pressure as investors consider the possibility that today's expected rate increase could mark the beginning of a broader tightening cycle. The Invesco KBW Bank ETF is down 1.0%. Crypto-related names are also extending yesterday's losses after the Clarity Act failed to advance in the Senate, with Coinbase Global (COIN 166.09, -6.02, -3.50%) and Robinhood Markets (HOOD 105.59, -4.86, -4.40%) both trading sharply lower.

The afternoon's main event remains the 2:00 p.m. ET FOMC decision. The CME FedWatch Tool currently assigns a 92.9% probability to a 25-basis-point rate hike. The decision itself is widely anticipated, placing added importance on Fed Chair Kevin Warsh's subsequent press conference and any signals regarding whether today's expected move represents the start of a sustained tightening cycle or a more limited policy adjustment.

Reviewing today's data:

• 09/12 MBA Mortgage Applications Index -4.1% (Prior -2.7%)
• Total retail sales increased 1.2% month-over-month in August (Briefing.com consensus: 0.9%) following an upwardly revised 0.5% decline (from -0.6%) in July. Excluding autos, retail sales surged 1.4% (Briefing.com consensus: 0.5%) following an upwardly revised 0.2% decline (from -0.3%) in July.
  • The key takeaway from the report is that it is indicative of ongoing strength in consumer spending on goods. Take gas station sales out of the equation, and retail sales were still up 1.1% month-over-month; core sales, which exclude autos, gasoline, building materials, and food services, jumped 1.4%.
• Aug Retail Sales, ex-auto 1.4% (Briefing.com consensus 0.5%; Prior -0.2%)
• Aug Import Prices 0.7% (Prior -0.3%)
• Aug Import Prices ex-oil 0.8% (Prior 0.3%)
• Aug Export Prices 0.6% (Prior -1.4%)
• Aug Export Prices ex-ag. 0.7% (Prior -1.6%)
• Jul Business Inventories 0.8% (Briefing.com consensus 0.2%; Prior 0.1%)
• Sep NAHB Housing Market Index 32 (Briefing.com consensus 34; Prior 35)
• 09/12 EIA Crude Oil Inventories -0.64M (Prior -0.39M)