Stock Market Update

[BRIEFING.COM] The stock market has built on yesterday's election-induced rally. The S&P 500 (+0.7%) and Nasdaq Composite (+1.4%) have benefitted from outsized gains in mega caps and semiconductor stocks while the Dow Jones Industrial Average (+0.1%) and Russell 2000 (+0.02%) trade slightly higher than yesterday. 

The upside bias follows a relatively pleasing batch of economic data this morning, helped along by a fear of missing out on further gains.

Market participants are also waiting on a decision by the FOMC to cut the target range for the fed funds rate by another 25 basis points to 4.50-4.75%. The policy announcement at 2:00 ET is followed by Fed Chair Powell's  press conference at 2:30 ET. 

Treasury yields are lower in front of the FOMC decision, building on initial gains in response to the data this morning. The 10-yr yield is down eight basis points to 4.35% and the 2-yr yield is down six basis points to 4.21%.

The price action in Treasuries has boosted rate-sensitive areas of the market. The S&P 500 real estate (+1.1%) and utilities (+0.5%) sectors are standouts in that respect. 

The communication services (+1.7%), information technology (+1.5%), and consumer discretionary (+1.4%) sectors lead the pack. The financial sector is the weakest performing sector, down 1.3% after yesterday's 6% surge.

Reviewing today's economic data:

• Weekly Initial Claims 221K (Briefing.com consensus 222K); Prior was revised to 218K from 216K, Weekly Continuing Claims 1.892 mln; Prior was revised to 1.853 mln from 1.862 mln
  • The key takeaway from the report is essentially the same as last week. Layoff activity remains calm, but for employees who do get laid off it is more challenging to find a new job, which is a reality consistent with a softening labor market.
• Q3 Productivity-Prel 2.2% (Briefing.com consensus 2.3%); Prior was revised to 2.1% from 2.5%, Q3 Unit Labor Costs-Prel 1.9% (Briefing.com consensus 0.5%); Prior was revised to 2.4% from 0.4%
  • The key takeaway from the report is that productivity growth is helping to keep labor costs in check.
• September Wholesale Inventories -0.2% (Briefing.com consensus -0.1%); Prior was revised to 0.2% from 0.1%