Stock Market Update

[BRIEFING.COM] The stock market opened to mixed action. The Dow Jones Industrial Average is 0.3% higher and the Russell 2000 sports a 0.2% gain while the S&P 500 (-0.9%) and Nasdaq Composite (-1.8%) show solid declines.

Market breadth also reflects mixed action. Advancers lead decliners by a 3-to-2 margin at the NYSE while decliners have an 11-to-10 lead over advancers at the Nasdaq.

Sharp declines in chipmakers have limited index performance so far and have the PHLX Semiconductor Index (SOX) trading 4.0% lower. NVIDIA (NVDA 119.27, -7.12, -5.6%) and Broadcom (AVGO 160.78, -8.56, -5.1%) are among the influential losers in the space.

This price action follows a Bloomberg report that the Biden Administration is looking to tighten export restrictions to China and comments by former President Trump suggesting that Taiwan should pay the U.S. for defending it. 

There are signs of some buying activity under the index surface, however. The Invesco S&P 500 Equal Weight ETF (RSP) trades 0.2% higher and three S&P 500 sectors are trading higher by at least 0.9%. 

Separately, total industrial production increased 0.6% month-over-month in June (Briefing.com consensus 0.3%) following an upwardly revised 0.9% increase (from 0.7%) in May. The capacity utilization rate jumped to 78.8% (Briefing.com consensus 78.6%) from an upwardly revised 78.3% (from 78.2%) in May. Total industrial production was up 1.6% yr/yr while the capacity utilization rate was 0.9 percentage point below its long-run average.

The key takeaway from the report was the continued increase in manufacturing output, which fits with an economy that isn't pacing for a hard landing.