Stock Market Update

[BRIEFING.COM] The S&P 500 (+0.4%) and Nasdaq Composite (+1.5%) closed off session highs, while the Dow Jones Industrial Average, which was trading higher initially, settled 0.3% lower. Market participants took advantage of weakness following last week's pullback in the major indices. The "buy-the-dip" mentality also coincided with a seasonally strong period for equities (the second half of December).

At the outset, advancers were outpacing decliners by a 3-to-2 margin at both the NYSE and Nasdaq. At the close, decliners at the NYSE led advancers by a 3-to-2 ratio, while advancers continued to hold a fractional advantage at the Nasdaq.

Rising interest rates, which surged last week following hotter-than-expected inflation data, dampened initial buying interest. The 10-year Treasury yield has edged up one basis point to 4.41%, while the 2-year yield has similarly risen one basis point to 4.25%.

Despite the pressure from rising rates, some individual stocks traded sharply higher, providing integral support to the S&P 500 and Nasdaq. Notable contributions came from Broadcom (AVGO 250.00, +25.20, +11.2%), Alphabet (GOOG 198.16, +6.78, +3.5%), and Tesla (TSLA 463.02, +26.79, +6.1%), all of which reached fresh 52-week highs.

Meanwhile, the equal-weighted S&P 500 closed 0.3% lower and seven S&P 500 sectors closed with declines. The energy sector registered the largest decline by a wide margin, dropping 2.2% amid sliding oil prices ($70.83/bbl, -0.46, -0.7%). The health care (-1.3%) and materials (-1.0%) sectors also logged solid declines.

The communication services (+1.3%), consumer discretionary (+1.7%), and information technology (+1.0%) sectors showed the largest advances among the four sectors in the green.

This week features a slate of market-moving events, including the November Retail Sales, Industrial Production, Housing Starts, Existing Home Sales, and Personal Income and Spending reports, the latter of which features the Fed's preferred inflation gauge in the PCE Price Index. The main event will be the FOMC decision on Wednesday.

There is a 95.4% probability in the fed funds futures market of a 25 basis points rate cut on Wednesday, according to the CME FedWatch tool.

• Nasdaq Composite: +31.3% YTD
• S&P 500: +27.3% YTD
• S&P Midcap 400: +17.7% YTD
• Russell 2000: +16.5% YTD
• Dow Jones Industrial Average: +16.0% YTD

Reviewing today's economic data:

• December NY Fed Empire State Manufacturing 0.2 (Briefing.com consensus 10.0); Prior 31.2
• December S&P Global US Manufacturing PMI - Prelim 48.3; Prior 49.7
• December S&P Global US Services PMI - Prelim 58.5; Prior 56.1

Looking ahead to Tuesday, market participants receive the following economic data: 

• 08:30 ET: November Retail Sales (Briefing.com consensus 0.5%; prior 0.4%) and Retail Sales, Ex-Auto (Briefing.com consensus 0.4%; prior 0.1%)
• 08:30 ET: November Industrial Production (Briefing.com consensus 0.3%; prior -0.3%) and Capacity Utilization (Briefing.com consensus 77.3%; prior 77.1%)
• 10:00 ET: October Business Inventories (Briefing.com consensus 0.2%; prior 0.1%)
• 10:00 ET: December NAHB Housing Market Index (Briefing.com consensus 47; prior 46)