Stock Market Update

[BRIEFING.COM] The S&P 500 (+0.4%), Nasdaq Composite (+0.6%), and Dow Jones Industrial Average (+0.4%) trade higher while the Russell 2000 (-0.4%) moves lower after outperforming its peers this week.

Index gains have been supported by strength in semiconductor-related names after Taiwan Semiconductor Manufacturing Company (TSM 209.00, +21.51, +11.5%) reported pleasing Q3 results, along with better-than-expected Q4 guidance. The PHLX Semiconductor Index (SOX) trades 2.5% higher than yesterday's close.

Gains in mega caps and growth stocks have also helped index performance. The Vanguard Mega Cap Growth ETF (MGK) shows a 0.7% gain and the Russell 3000 Growth Index is 0.6% higher. 

There's a negative bias under the index surface, though. Decliners lead advancers by an 11-to-10 margin at the NYSE and by a 3-to-2 margin at the Nasdaq. Buying interest has been limited by rising market rates in response to solid economic data.

September retail sales were stronger than expected and initial jobless claims were not as bad as feared. The 10-yr yield is up seven basis points to 4.09% and the 2-yr yield is up four basis points to 3.98% after hitting 4.00% earlier.

The downside bias in equities is also related to the notion that today's data will support a less aggressive rate cut pace by the Fed than previously thought.

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