Stock Market Update

[BRIEFING.COM] The stock market exhibited mixed action at the index level today, but the vibe under the surface was positive through the entire session. Advancers led decliners by a 2-to-1 margin at the NYSE and by a 3-to-2 margin at the Nasdaq.

The S&P 500 (-0.5%) and Nasdaq Composite (-0.9%) traded above and below their prior closing levels, following the fickle price action in mega cap shares. Meanwhile, the Dow Jones Industrial Average (+0.2%) and Russell 2000 (+1.3%) were either mostly or entirely positive today. 

The fickle nature of mega cap stocks was evident in the performance of the Vanguard Mega Cap Growth ETF (MGK), which traded up as much as 0.9% at its high and down as much as 2.1% at its low. The equal-weighted S&P 500, however, settled with a 0.1% gain amid rebound action elsewhere.

The upside bias stemmed from buy-the-dip interest after yesterday's solid sell off. 

Outsized moves in either direction were reserved for names with specific catalysts. Honeywell (HON 202.45, -11.20, -5.2%) and Ford Motor (F 11.16, -2.51, -18.4%) were losing standouts after reporting earnings news. Meanwhile, IBM (IBM 191.98, +7.96, +4.3%) and ServiceNow (NOW 848.79, +97.92, +13.4%) were winning standouts after reporting earnings.

The 10-yr note yield declined three basis points to 4.26% and the 2-yr note yield rose two basis points to 4.44%. Treasuries were reacting to the this morning's economic releases, which were in-line with the market's soft landing expectation and also acted as support for equities. Also, today's $44 billion 7-yr note auction met strong demand.

• Nasdaq Composite:+14.5% YTD
• S&P 500: +13.2% YTD
• Russell 2000: +9.7% YTD
• S&P Midcap 400: +8.8% YTD
• Dow Jones Industrial Average: +6.0% YTD

Reviewing today's economic data:

• Q2 GDP-Adv. 2.8% (Briefing.com consensus 1.9%); Prior 1.4%; Q2 Chain Deflator-Adv. 2.3% (Briefing.com consensus 2.6%); Prior 3.1%
  • The key takeaway from the report is that it didn't show any breakdown in consumer spending. In fact, consumer spending growth accelerated, increasing 2.3% on the heels of a 1.5% increase in the first quarter.
• Weekly Initial Claims 235K (Briefing.com consensus 240K); Prior was revised to 245K from 243K; Weekly Continuing Claims 1.851 mln; Prior was revised to 1.860 mln from 1.867 mln
  • The key takeaway from the report is that there hasn't been an alarming jump in initial claims -- a leading indicator -- to even higher levels; therefore, a conclusion will be drawn that the labor market is seeing some normal slowing as opposed to a rapid deterioration.
• June Durable Orders -6.6% (Briefing.com consensus 0.4%); Prior 0.1%; June Durable Goods -ex transportation 0.5% (Briefing.com consensus 0.2%); Prior -0.1%
  • The key takeaway from the report is that the weakness was driven by a large drop in nondefense aircraft and parts orders, which are volatile. An added takeaway is that business spending in June was quite solid, evidenced by the 1.0% increase in new orders for nondefense capital goods excluding aircraft.

Friday's economic calendar features:

• 8:30 ET: June Personal Income (Briefing.com consensus 0.4%; prior 0.5%), Personal Spending (Briefing.com consensus 0.3%; prior 0.2%), PCE Prices (Briefing.com consensus 0.1%; prior 0.0%), and core PCE Prices (Briefing.com consensus 0.2%; prior 0.1%)
• 10:00 ET: Final July University of Michigan Consumer Sentiment (Briefing.com consensus 66.0; prior 66.0)