Stock Market Update

[BRIEFING.COM] Today's trade features a positive bias in market breadth, but losses in the major indices. Advancers lead decliners by a roughly 2-to-1 margin at the NYSE and by a 4-to-3 margin at the Nasdaq. The S&P 500 trades 0.5% lower, the Dow Jones Industrial Average shows a 0.2% decline, and the Nasdaq Composite is down 0.9%. 

The Russell 2000 has outperformed its peers, trading 0.2% higher, benefitting from some rotational activity out of mega caps and other areas of the market that have led market gains this year. This has been the case all month, leading the small cap index to register a 10.7% gain since October.

That's not to say that the "rest" of the market has performed poorly this month. The three major indices are sitting on gains ranging from 5.0% to 7.2% since the month started.

Outsized declines in chipmakers like NVIDIA (NVDA 132.67, -4.24, -3.1%) and Broadcom (AVGO 158.92, -5.82, -3.6%) have weighed down the three main indices, along with losses in other heavily-weighted technology stocks. Apple (AAPL 234.89, -0.15, -0.1%) and Microsoft (MSFT 424.18, -3.80, -0.9%) are among the influential names in that regard.

Some of this weakness has been attributed to the disappointing responses to earnings results and/or guidance from Dell (DELL 123.50, -18.24, -12.9%), Autodesk (ADSK 293.35, -24.61, -7.7%), CrowdStrike (CRWD 346.15, -18.15, -5.0%), and Workday (WDAY 249.71, -20.48, -7.6%).

Some of the weakness in technology stocks also reflects profit-taking activity as many names in the space sit on huge gains since the start of the year. 

The losses in some of the aforementioned names have led the S&P 500 information technology sector to trade 1.8% lower. Meanwhile, the real estate sector leads the pack, up 0.9% in response to dropping market rates.

The 10-yr yield is down six basis points at 4.24% and the 2-yr yield is down five basis points at 4.20% as market participants digest a big batch of economic news. The PCE price inflation was a bit sticky in October above the Fed's 2.0% target, but real disposable personal income increased 0.4%, weekly initial jobless claims were encouraging with a low reading of just 213,000, and pending home sales jumped 2.0% in October.

Reviewing today's economic data:

• Weekly MBA Mortgage Applications Index 6.3%; Prior 1.7%
• October Personal Income 0.6% (Briefing.com consensus 0.3%); Prior 0.3%, October Personal Spending 0.4% (Briefing.com consensus 0.2%); Prior was revised to 0.6% from 0.5%, October PCE Prices 0.2% (Briefing.com consensus 0.2%); Prior 0.2%, October PCE Price - Core 0.3% (Briefing.com consensus 0.3%); Prior 0.3%
  • The key takeaway from the report is the absence of disinflation in the PCE price indexes on a year-over-year basis. That wasn't necessarily a surprise given that the monthly readings were in-line with estimates, yet it will keep the Fed inclined to take a more gradual approach to cutting the target range for the fed funds rate.
• Weekly Initial Claims 213K (Briefing.com consensus 217K); Prior was revised to 215K from 213K, Weekly Continuing Claims 1.907 mln; Prior was revised to 1.898 mln from 1.908 mln
  • The key takeaway from the report is the much the same: employers are reluctant to let employees go, but for employees let go it is becoming more challenging to find a new job.
• October Durable Orders 0.2% (Briefing.com consensus 0.4%); Prior was revised to -0.4% from -0.8%, October Durable Goods - ex transportation 0.1% (Briefing.com consensus 0.3%); Prior 0.4%
  • The key takeaway from the report is that it showed some softness in business spending in October, evidenced by a 0.2% decline in new orders for nondefense capital goods excluding aircraft -- a proxy for business spending.
• October Adv. Intl. Trade in Goods -$99.1 bln; Prior was revised to -$108.7 bln from -$108.2 bln
• October Adv. Retail Inventories 0.1%; Prior was revised to 0.6% from 0.8%
• October Adv. Wholesale Inventories 0.2%; Prior was revised to -0.2% from -0.1%
• Q3 GDP - Second Estimate 2.8% (Briefing.com consensus 2.8%); Prior 2.8%, Q3 GDP Deflator - Second Estimate 1.9% (Briefing.com consensus 1.8%); Prior 1.8%
  • The key takeaway from the report is that there was a modest downward revision to personal consumption expenditures, yet that did not alter the fact that personal spending was quite healthy in the third quarter.
• November Chicago PMI 40.2 (Briefing.com consensus 45.0); Prior 41.6
• October Pending Home Sales 2.0% (Briefing.com consensus -1.5%); Prior was revised to 7.5% from 7.4%