Stock Market Update

[BRIEFING.COM] The S&P 500 (-1.4%), Russell 2000 (-1.1%), and Nasdaq Composite (-2.8%) exhibited some consolidation today after recent gains. Mega cap stocks and chipmakers, which have been influential winners all year, registered outsized declines today and weighed on the broader market. 

NVIDIA (NVDA 117.99, -8.37, -6.6%), Meta Platforms (META 461.99, -27.80, -5.7%), Apple (AAPL 228.88, -5.94, -2.5%), and Broadcom (AVGO 155.98, -13.39, -7.9%) were among the standouts in that respect. The Vanguard Mega Cap Growth ETF (MGK) declined 2.8% and the PHLX Semiconductor Index (SOX) slid 6.8%.

Semiconductor stocks were also reacting to a Bloomberg report that the Biden Administration is discussing tightening export restrictions to China even further. 

The price-weighed Dow Jones Industrial Average closed 0.6% higher, boosted by Johnson & Johnson (JNJ 156.58, +5.57, +3.7%) after its Q2 earnings report, and UnitedHealth (UNH 573.28, +24.41, +4.5%), which was upgraded at Jefferies to Buy from Hold after yesterday's sharp earnings-related gain.

Bank stocks also outperformed the rest of the market. The SPDR S&P Regional Bank ETF (KRE) jumped 1.2% and the SPDR S&P Bank ETF (KBE) closed 0.9% higher. The S&P 500 financial sector was among the top performers today, logging a 0.9% gain.

The activity in mega caps and chipmakers led the information technology (-3.7%) and communication services (-2.1%) sectors sharply lower.

The equity and bond markets didn't react much to the Fed's July Beige Book, which showed that economic activity maintained a slight to modest pace of growth in a majority of Districts this reporting cycle. The 2-yr note yield declined one basis point to 4.43% and the 10-yr note yield declined two basis points to 4.15%. This also followed a solid $13 billion 20-yr bond reopening.

• Nasdaq Composite: +19.9% YTD
• S&P 500: +17.2% YTD
• Russell 2000: +10.5% YTD
• S&P Midcap 400: +10.4% YTD
• Dow Jones Industrial Average: +9.3% YTD

Reviewing today's economic data:

• Weekly MBA Mortgage Applications Index 3.9%; Prior -0.2%
• June Housing Starts 1.353 mln (Briefing.com consensus 1.310 mln); Prior was revised to 1.314 mln from 1.277 mln; June Building Permits 1.446 mln (Briefing.com consensus 1.391 mln); Prior was revised to 1.399 mln from 1.386 mln
  • The key takeaway from the report is that, while it might have been better than expected relative to consensus estimates, it was not a strong report nor a particularly encouraging report for an inventory-constrained housing market in need of lower-priced, single-family homes.
• June Industrial Production 0.6% (Briefing.com consensus 0.3%); Prior was revised to 0.9% from 0.7%; June Capacity Utilization 78.8% (Briefing.com consensus 78.6%); Prior was revised to 78.3% from 78.2%
  • The key takeaway from the report was the continued increase in manufacturing output, whic

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

• 8:30 ET: Weekly Initial Claims (Briefing.com consensus 225,000; prior 222,000), Continuing Claims (prior 1.852 mln), and July Philadelphia Fed survey (Briefing.com consensus 2.9; prior 1.3)
• 10:00 ET: June Leading Indicators (Briefing.com consensus -0.3%; prior -0.5%)
• 10:30 ET: Weekly natural gas inventories (prior +65 bcf)
• 16:00 ET: May Net Long-Term TIC Flows (prior $123.1 bln)