Stock Market Update

[BRIEFING.COM] The market started the day in rally-mode. Early upside moves were driven in part by a big gain in Netflix (NFLX 544.87, +52.68, +10.7%) after beating Q4 subscriber growth estimates, along with strength in mega cap and semiconductor stocks. 

The strength in semiconductor stocks was fueled by pleasing earnings results from ASML (ASML 847.31, +68.92, +8.9%), which offset weakness in Texas Instruments (TXN 170.07, -4.27, -2.5%) following its disappointing Q1 guidance. 

Stocks rolled over, though, in the afternoon trade, which left the major indices at or near their lows of the day. Still, ongoing strength in heavily-weighted stocks and semiconductor-related names left the Nasdaq Composite (+0.4%) and S&P 500 (+0.1%) with slim gains, marking another record close for the S&P 500. The Dow Jones Industrial Average logged a 0.3% decline and the Russell 2000 fell 0.8%. 

Microsoft (MSFT 402.56, +3.66, +0.9%) was a standout winner from the mega cap space, briefly topping a $3 trillion market cap for the first time today. The Vanguard Mega Cap Growth ETF (MGK) gained 0.6% and the PHLX Semiconductor Index (SOX) jumped 1.5%.

There wasn't a strong increase in selling activity in the afternoon, but rather a dissipation of early buyer enthusiasm. This coincided with Treasury yields turning higher in response to today's $61 billion 5-yr note auction, which met poor demand. This followed yesterday's strong $60 billion 2-yr note sale.

The 10-yr note yield climbed four basis points today to 4.18% after hitting 4.09% in front of this morning's economic data. The 2-yr note yield rose one basis point to 4.37%.

Also, the S&P 500 also could not maintain a posture above 4,900, which contributed to the afternoon pullback.

Outsized losses were reserved for stocks that disappointed with earnings and/or guidance. AT&T (T 16.68, -0.51, -3.0%), DuPont (DD 64.20, -10.49, -14.0%), and Kimberly-Clark (KMB 118.04, -6.91, -5.5%) were among the losing standouts in that respect.

Today's economic data was limited to the preliminary S&P Global US Manufacturing PMI and S&P Global US Services PMI for January, which were both in expansion territory (i.e. above 50 readings) and acted as support for the stock market in the early going.

Additionally, news that the People's Bank of China cut its required reserve ratio for commercial banks by a 50 basis points contributed to the early positive bias.

• Nasdaq Composite: +3.1%
• S&P 500: +2.1%
• Dow Jones Industrial Average: +0.3%
• S&P Midcap 400: -1.4%
• Russell 2000: -3.2

Thursday's economic calendar features:

• 8:30 ET: Advance Q4 GDP (Briefing.com consensus 2.0%; prior 4.9%), advance Q4 GDP Deflator (Briefing.com consensus 2.8%; prior 3.3%), December Durable Orders (Briefing.com consensus 0.1%; prior 5.4%), Durable Orders ex-transportation (Briefing.com consensus 0.2%; prior 0.5%), weekly Initial Claims (Briefing.com consensus 200,000; prior 187,000), Continuing Claims (prior 1.806 mln), advance December goods trade deficit (prior -$90.3 bln), advance Retail Inventories (prior -0.1%), and advance Wholesale Inventories (prior -0.2%)
• 10:00 ET: December New Home Sales (Briefing.com consensus 640,000; prior 590,000)
• 10:30 ET: Weekly natural gas inventories (prior -154 bcf)