Stock Market Update

[BRIEFING.COM] The S&P 500 (-0.02%) and Nasdaq Composite (+0.04%) settled near their prior closing levels, the Dow Jones Industrial Average closed 0.4% higher, and the Russell 2000 (-0.3%) declined slightly after leading index gains this week.

There was a negative bias under the index surface related to rising market rates and the notion that the Fed won't be as aggressive as previously thought after more solid economic data. Decliners led advancers by an 11-to-10 margin at the NYSE and by a 3-to-2 margin at the Nasdaq. 

This morning's data included September retail sales, which were stronger than expected, and initial jobless claims, which were not as bad as feared. The 10-yr yield, at 4.03% shortly before the data, settled eight basis points higher than yesterday at 4.08%. The 2-yr yield, at 3.95% before 8:30 ET, settled at 3.98% after reaching 4.00%. 

Downside moves in the equity market were somewhat limited due in part to strength in semiconductor stocks. The PHLX Semiconductor Index (SOX) settled 1.0% higher after Taiwan Semiconductor Manufacturing Company (TSM 205.84, +18.36, +9.8%) reported pleasing Q3 results, along with better-than-expected Q4 guidance.

Positive responses to earnings results from the likes of Blackstone (BX 169.73, +10.02, +6.3%) and Dow component Travelers (TRV 264.82, +21.87, +9.0%) also provided a measure of support to the equity market.

Five S&P 500 sectors closed higher led by energy (+0.4%), information technology (+0.4%), and financials (+0.3%). The rate-sensitive utilities (-0.9%) and real estate (-0.7%) sectors closed near the bottom of the pack. 

• S&P 500: +22.5% YTD
• Nasdaq Composite: +22.4% YTD
• S&P Midcap 400: +15.0% YTD
• Dow Jones Industrial Average: +14.7% YTD
• Russell 2000: +12.5% YTD

Reviewing today's economic data:

• Weekly Initial Claims 241K (Briefing.com consensus 270K); Prior was revised to 260K from 258K, Weekly Continuing Claims 1.867 mln; Prior was revised to 1.858 mln from 1.861 mln
  • The key takeaway from the report is that it is muddled by the effects of the hurricanes, yet it is being greeted with a sense of pleasant surprise that initial jobless claims were much better than feared.
• September Retail Sales 0.4% (Briefing.com consensus 0.2%); Prior 0.1%, September Retail Sales ex-auto 0.5% (Briefing.com consensus 0.1%); Prior was revised to 0.2% from 0.1%
  • The key takeaway from the report is that consumer spending on goods accelerated in September with notable increases seen in many discretionary categories like miscellaneous store retailers (+4.0%), clothing and clothing accessories (+1.5%), and food services and drinking places (+1.0%). This is a "no landing" type of report.
• October Philadelphia Fed Index 10.3 (Briefing.com consensus 4.0); Prior 1.7
• September Industrial Production -0.3% (Briefing.com consensus -0.1%); Prior was revised to 0.3% from 0.8%, September Capacity Utilization 77.5% (Briefing.com consensus 77.9%); Prior was revised to 77.8% from 78.0%
  • The key takeaway from the report is that industrial production in September was pressured by two extraordinary factors, which implies a rebound in growth should follow as those extraordinary factors find correction. The Boeing strike held back growth by an estimated 0.3% and the effects of Hurricanes Helene and Milton subtracted an estimated 0.3%.
• August Business Inventories 0.3% (Briefing.com consensus 0.3%); Prior was revised to 0.3% from 0.4%
• October NAHB Natural Gas Inventories 43 (Briefing.com consensus 43); Prior 41

Friday's economic calendar includes the September Housing Starts and Building Permits report at 8:30 ET.