Stock Market Update

[BRIEFING.COM] The stock market has exhibited mixed action so far. There was an initial burst of buying activity driven by rebound interest after yesterday's FOMC-induced sell-off, but early buying has mostly dissipated. Shortly after the open, advancers led decliners by a 3-to-2 margin at the NYSE and at the Nasdaq. Now, decliners lead advancers by a better than 3-to-2 margin at the NYSE and by a 4-to-3 margin at the Nasdaq.

The price action in Treasuries contributed to the deterioration in equities. The 10-yr yield (4.58%) is up another ten basis points today after jumping 11 basis points yesterday following a batch of economic data (initial jobless claims, third estimate for Q3 GDP, existing home sales, and leading indicators) that was better than expected.

Disappointing earnings results and/or guidance from Micron (MU 86.91, -17.04, -16.4%) and Lennar Corp. (LEN 138.11, -7.83, -5.4%) have contributed to the underlying negative vibe in today's session. This price action has also contributed to the underperformance of stocks in their respective industries. The SPDR S&P Homebuilder ETF (XHB) trades 2.2% lower and the PHLX Semiconductor Index (SOX) shows a 1.0% decline.

The S&P 500 sectors that house semiconductor-related names and homebuilders have held up due to strength in their mega cap components. The information technology sector is boosted by Apple (AAPL 251.36, +3.31, +1.3%), Microsoft (MSFT 441.19, +3.86, +0.9%), and NVIDIA (NVDA 133.04, +4.13, +3.2%) while the consumer discretionary sector is boosted by Amazon.com (AMZN 225.71, +5.19, +2.3%). Tesla (TSLA 433.78, -6.38, -1.5%) shares rolled over after initially trading higher.

Separately, the Bank of England voted 6-to-3 to leave its benchmark rate unchanged at 4.75% and the Bank of Japan voted 8-to-1 to leave its benchmark rate unchanged at 0.25%.

Reviewing today's economic data:

• Weekly Initial Claims 220K (Briefing.com consensus 237K); Prior 242K, Weekly Continuing Claims 1.874 mln; Prior was revised to 1879 mln from 1.886 mln
  • The key takeaway from the report is the low level of initial jobless claims, which connotes a reluctance on the part of employers to layoff staff.
• Q3 GDP - Third Estimate 3.1% (Briefing.com consensus 2.8%); Prior 2.8%, Q3 GDP Deflator - Third Estimate 1.9% (Briefing.com consensus 1.9%); Prior 1.9%
  • The key takeaway from the report is that it is dated (we're less than two weeks away from the end of the fourth quarter); however, the report speaks to the enduring -- and surprising -- strength of the U.S. economy despite the Fed raising rates 12 times between March 2022 and July 2023.
• December Philadelphia Fed Index -16.4 (Briefing.com consensus 3.0); Prior -5.5
• November Existing Home Sales 4.15 mln (Briefing.com consensus 4.10 mln); Prior 3.96 mln
  • The key takeaway from the report is that it shows how lower mortgage rates can move the needle on existing home sales given the pent-up demand; however, with mortgage rates having risen noticeably again, expectations for continuing strength in existing home sales will be tempered by affordability concerns.
• November Leading Indicators 0.3% (Briefing.com consensus -0.1%); Prior -0.4%