Stock Market Update

[BRIEFING.COM] The Nasdaq Composite and S&P 500 started this week at record highs and amid plenty of chatter about stretched valuations and overbought conditions. The fact that they are lower today is unsurprising. Arguably, the fact that they aren't down more is the bigger surprise.

That's not because there is a news item that suggests they should be down more. Rather, it's simply that they have had such a big run since the election -- and for the year -- and yet there isn't any material impact from profit-taking interest.

Losses at the index level are modest in scope. NVIDIA (NVDA 139.64, -2.80, -2.0%), however, has been an influential source of weakness, sliding on a Bloomberg report that China has opened an antimonopoly investigation.

NVIDIA's weakness has kept the information technology sector (-0.3%) under wraps, which matters since it is the market's most heavily-weighted sector. After the close, Oracle (ORCL 189.51, -2.18, -1.2%) will become a trading catalyst for the sector, and maybe the broader market, when it reports its quarterly earnings results.

That is one key event market participants are waiting on and which has held back buying interest. Other key events this week include the November Consumer Price Index on Wednesday, the November Producer Price Index on Thursday, and the ECB policy meeting on Thursday. There will also be three Treasury auctions -- $58 billion 3-yr note, $39 billion 10-yr note reopening, and $22 billion 30-yr bond reopening -- between Tuesday and Thursday.

Treasury yields are higher today. The 2-yr note yield is up two basis points to 4.12% and the 10-yr note yield is up four basis points to 4.19%. That move has followed President-elect Trump's weekend interview with "Meet the Press" in which he reiterated his aim to extend the tax cuts, levy tariffs as needed, and deport illegal immigrants. He added, too, that he won't try to replace Jerome Powell as Fed Chairman. 

His interview was rightfully a focal point amid the headline competition from the report that the Assad regime was overthrown in Syria and that Chinese leaders pledged to pursue more proactive fiscal stimulus and moderately looser monetary policy in 2025.

The former, stirring concerns about unrest in the Middle East, has boosted oil prices and the energy sector (+0.7%), while the latter has given the materials sector (+0.5%) an added lift, as well as casino stocks, which have helped prop up the consumer discretionary sector (flat).

Today's biggest sector laggards are the communication services (-1.2%), utilities (-1.1%), industrials (-0.9%), and financial (-0.9%) sectors.

In other news, Omnicom (OMC 94.41, -9.01, -8.7%) shook up the advertising world with an announcement that it will acquire Interpublic Group (IPG 31.28, +2.02, +6.90) in a stock-swap deal.

Reviewing today's economic data:

• October Wholesale Inventories increased 0.2% month-over-month (Briefing.com consensus 0.2%) following a 0.2% decline in September.