Stock Market Update

[BRIEFING.COM] The growth stocks are once again leading the major indices sharply lower amid consternations surrounding the Fed, interest rates, and economic growth. The S&P 500 is down 1.3%, the Nasdaq Composite is down 2.7%, and the Dow Jones Industrial Average is down 0.8%. 

The S&P 500 information technology (-3.1%), consumer discretionary (-3.5%), and communication services (-2.4%) are suffering noticeable declines for the second straight day amid weakness in the mega-caps. The Vanguard Mega Cap Growth ETF (MGK 228.38, -7.29) is down 3.1%. 

The broader market is also trading lower, except for pockets of strength in the utilities (+2.0%), consumer staples (+1.1%), energy (+1.1%), real estate (+0.9%), and health care (+0.8%) sectors. The Invesco S&P 500 Equal Weight ETF (RSP 155.64, -1.23) is down 0.8%. 

The losses have taken the S&P 500 below its 200-day moving average (4490), inviting increased hedging interest to protect against technical-driven weakness. The CBOE Volatility Index has shot higher by 15.1% to 24.20. 

Interest rates have calmed down a bit after reaching fresh multi-year highs overnight. Presently, the 2-yr yield is down three basis points to 2.48% after topping 2.60% overnight while the 10-yr yield is up four basis points to 2.59% after topping 2.65% overnight. 

After hawkish-sounding Fed commentary fueled the rise in rates yesterday, investors will scrutinize the FOMC Minutes for the March meeting at 2:00 p.m. ET for further confirmation of the central bank's intentions to tighten policy more aggressively. 

Concerns about the Fed having a hand in causing a recession are well documented. Growth concerns are especially evident in the steep underperformance of the transportation stocks this month. The Dow Jones Transportation Average is down 11.9% in April, including today's 3.6% decline. For comparison, the S&P 500 is down 1.5% this month. 

Staying in the transportation space, JetBlue Airways (JBLU 12.59, -1.05, -7.7%) made a $3.6 billion all-cash offer for Spirit Airlines (SAVE 26.38, -0.55, -2.0%), which had previously agreed to merge with Frontier Group (ULCC 11.05, -0.87, -7.3%).

Reviewing today's economic data:

• The weekly MBA Mortgage Applications Index fell 6.3% following a 6.8% decline in the prior week.
• Crude oil inventories had a build of 2.42 mln barrels following a draw of 3.45 mln barrels in the prior week.