Stock Market Update

[BRIEFING.COM] Stocks had a strong showing today, supported by a drop in market rates and strong mega caps. The major indices all closed with gains ranging from 0.5% to 1.6%, although volume was still light at the NYSE. Today's upside moves brought the S&P 500 back above 4,400, which acted an area of resistance yesterday. 

Market rates started to move lower overnight in response to a batch of soft August PMI data out of Europe. Treasuries extended their rally following the release of some softening Manufacturing and Services PMI readings for the US after the stock market opened. The 2-yr note yield fell 11 basis points to 4.93% and the 10-yr note yield fell 13 basis points to 4.20%.

NVIDIA (NVDA 471.16, +14.48, +3.2%) was among the top performers from the mega cap space ahead of its earnings report after today's close. Apple (AAPL 181.22, +3.89, +2.2%) and Microsoft (MSFT 327.00, +4.54, +1.4%) also logged sizable gains on no news. Those moves helped to fuel a 1.6% gain in the Vanguard Mega Cap Growth ETF (MGK) and a 1.1% gain in the market-cap weighted S&P 500. 

Market internals reflected fairly broad buying interest under the index surface. Advancers outpaced decliners by a 7-to-2 margin at the NYSE and a 2-to-1 margin at the Nasdaq.

Ten of the 11 S&P 500 sectors logged a gain led by information technology (+1.9%), which was boosted by its mega cap components. Communication services (+1.9%) was another top performer, drawing added support from a big gain in Netflix (NFLX 427.55, +14.38, +3.5%) after it garnered some supportive comments from Oppenheimer. 

The energy sector (-0.3%) was the lone holdout in negative territory by the close.

Retailers headlined the earnings calendar since yesterday's close. Foot Locker (FL 16.64, -6.56, -28.3%) and Peloton (PTON 5.41, -1.58, -22.6%) sank following their earnings results and/or guidance while Abercrombie & Fitch (ANF 50.86, +9.69, +23.5%) registered an outsized gain after beating earnings estimates and raising guidance.

• Nasdaq Composite: +31.10% YTD
• S&P 500: +15.5% YTD
• S&P Midcap 400: +6.9% YTD
• Russell 2000: +6.2% YTD
• Dow Jones Industrial Average: +4.0% YTD

Reviewing today's economic data:

• Weekly MBA Mortgage Applications Index -4.2%; Prior -0.8%
• August S&P Global US Manufacturing PMI - Prelim 47.0; Prior 49.0
• August S&P Global US Services PMI - Prelim 51.0; Prior 52.3
• July New Home Sales 714K (Briefing.com consensus 701K); Prior was revised to 648K from 697K
  • The key takeaway from the report is that new home sales activity, which is measured on signed contracts, was driven by sales of more moderately priced homes as higher building costs crimped the supply of lower-priced homes while higher mortgage rates contributed to affordability pressures across the spectrum.

Thursday's economic calendar will feature:

• 8:30 ET: Weekly Initial Claims (Briefing.com consensus 240,000; prior 239,000), Continuing Claims (prior 1.716 mln), July Durable Orders (Briefing.com consensus -4.0%; prior 4.7%), and Durable Orders ex-transportation (Briefing.com consensus 0.2%; prior 0.6%)
• 10:30 ET: Weekly natural gas inventories (prior +35 bcf)