Stock Market Update

[BRIEFING.COM] The S&P 500 (-1.3%), Russell 2000 (-1.0%), and Nasdaq Composite (-2.7%) trade near their worst levels of the session. The negative bias stems from normal consolidation activity activity after recent gains. 

Areas of the market that had an outsized impact on recent market gains have underperformed again today. Specifically, mega cap and semiconductor-related shares are showing weakness, leading the PHLX Semiconductor Index (SOX) to trade 5.2% lower and the Vanguard Mega Cap Growth ETF (MGK) to trade 2.7% lower.

Chipmakers are 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 sports a 0.6%, boosted by Johnson & Johnson (JNJ 155.99, +4.98, +3.3%) after its Q2 earnings report, and UnitedHealth (UNH 570.13, +21.26, +3.9%), which was upgraded at Jefferies to Buy from Hold after yesterday's sharp earnings-related gain.

Seven of the S&P 500 sectors are trading higher led by consumer staples (+1.4%) and energy (+1.0%). The energy sector is benefitting from positive action in WTI crude oil futures ($82.75/bbl, +2.00, +2.5%).

Meanwhile, the heavily-weighted information technology sector shows a 3.6% decline. The communication services (-2.0%) and consumer discretionary (-1.9%) sectors are the next worst performers. 

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