Stock Market Update

[BRIEFING.COM] The market fell under selling pressure today. The Dow Jones Industrial Average (-1.3%), Russell 2000 (-2.1%), S&P 500 (-2.3%), and Nasdaq Composite (-3.6%) all registered solid losses. Many stocks participated in the broad retreat, but losses in mega cap stocks, semiconductor shares, and growth stocks had an outsized impact on index performance.

This price action followed quarterly results and guidance from Alphabet (GOOG 174.37, -9.23, -5.0%) and Tesla (TSLA 215.99, -30.39, -12.3%) that did not live up to high expectations. The Vanguard Mega Cap Growth ETF (MGK) declined 3.8%, the PHLX Semiconductor Index (SOX) logged a 5.4% decline, and the Russell 3000 Growth Index fell 3.7%.

Dow component Visa (V 254.17, -10.62, -4.0%) and Lamb Weston (LW 56.42, -22.20, -28.2%) were also among the influential laggards today, stirring concerns about economic growth prospects after the former mentioned a slowdown in spending by lower-income consumers and the latter issued an FY25 earnings warning that was linked to a slowdown in global restaurant traffic.

With today's strong losses, the major indices are still up nicely for the year with gains ranging from 5.7% to 15.5%. So, some of the selling interest was linked to normal consolidation activity as earnings season ramps up. The Invesco S&P 500 Equal Weight ETF (RSP) registered a 1.2% decline.

The heavily-weighed information technology (-4.1%), consumer discretionary (-3.9%), and communication services (-3.8%) closed with the largest declines due to their mega cap components. The remaining four sectors that closed in negative territory registered losses greater than 1.0%.

Treasuries settled in mixed fashion. The 10-yr note yield rose five basis points to 4.29% and the 2-yr note yield fell six basis points to 4.42%. This price action was in response to a disappointing New Home Sales report for June, a poorly received 5-yr note sale, and preliminary July PMI data out of the eurozone and U.S. that was mostly lower than the previous month.

• Nasdaq Composite:+15.5% YTD
• S&P 500: +13.8% YTD
• Russell 2000: +8.3% YTD
• S&P Midcap 400: +7.8% YTD
• Dow Jones Industrial Average: +5.7% YTD

Reviewing today's economic data:

• Weekly MBA Mortgage Applications Index -2.2%; Prior -3.9%
• June Adv. Intl. Trade in Goods -$96.8 bln; Prior was revised to -$99.4 bln from -$100.6 bln
• June Adv. Retail Inventories 0.7%; Prior was revised to 0.6% from 0.7%
• June Adv. Wholesale Inventories 0.2%; Prior 0.6%
• July S&P Global US Manufacturing PMI - Prelim 49.5; Prior 51.6
• July S&P Global Services PMI - Prelim 56.0; Prior 55.3
• June New Home Sales 617K (Briefing.com consensus 640K); Prior was revised to 621K from 619K
  • The key takeaway from the report is that new home sales activity remained soft in June, pressured by a lack of lower-priced homes and affordability pressures stemming from the persistence of high mortgage rates and higher selling prices.

Thursday's economic lineup features:

• 8:30 ET: Advance Q2 GDP (Briefing.com consensus 1.9%; prior 1.4%), Advance Q2 GDP Deflator (Briefing.com consensus 2.6%; prior 3.1%), weekly Initial Claims (Briefing.com consensus 240,000; prior 243,000), Continuing Claims (prior 1.867 mln), June Durable Orders (Briefing.com consensus 0.4%; prior 0.1%), and Durable Orders ex-transport (Briefing.com consensus 0.2%; prior -0.1%)
• 10:30 ET: Weekly natural gas inventories (prior +10 bcf)

Tomorrow's calendar also includes results from the $44 bln 7-yr Treasury note auction at 1:00 ET.