Stock Market Update

[BRIEFING.COM] Stocks are in rally-mode today as investors continue to shake off fears about economic growth and a weakening labor market, which drove choppy action since the start of August.

Market participants are feeling better about growth prospects and consumer spending following earnings results and commentary about the consumer from Walmart (WMT 73.16, +4.50, +6.6%), along with a much better than expected Retail Sales Report for July. 

A pleasing weekly jobless claims report helped calm fears about a weakening labor market that were piqued by the July jobs report. 

Cisco's (CSCO 48.71, +3.28, +7.2%) solid fiscal Q4 operating performance is another contributing factor to today's upside bias. 

Just about everything is participating in a broad advance that favors small caps and discretionary-related names. The Russell 2000 is trading 2.8% higher and the S&P 500 consumer discretionary sector trades 2.9% higher. 

The outperformance of the consumer discretionary sector is also driven by a solid gain in Ulta Beauty (ULTA 367.13, +38.35, +11.6%) after Berkshire Hathaway reported a new position in the stock. 

Treasury yields are sharply higher in another manifestation of growth worries easing. The 2-yr note yield is up 15 basis points to 4.10% and the 10-yr note yield is up 11 basis points to 3.93%.

Reviewing today's economic data:

• August Philadelphia Fed Index -7.0; Prior 13.9
• July Retail Sales 1.0% (Briefing.com consensus 0.3%); Prior was revised to -0.2% from 0.0%, July Retail Sales Ex-Auto 0.4% (Briefing.com consensus 0.2%); Prior was revised to 0.5% from 0.4%
  • The key takeaway from the report is that the increase in retail sales outpaced the rate of inflation in July, which connotes an understanding that the improvement in retail sales was driven by increased demand on top of price increases.
• Weekly Initial Claims 227K (Briefing.com consensus 232K); Prior was revised to 234K from 233K, Weekly Continuing Claims 1.854 mln; Prior was revised to 1.871 mln from 1.875 mln
  • The key takeaway from the report is that initial claims remain well below levels typically associated with recession conditions.
• July Import Prices 0.1%; Prior 0.0%
• July Import Prices ex-oil 0.1%; Prior 0.2%
• July Export Prices 0.7%; Prior was revised to -0.3% from -0.5%
• July Export Prices ex-ag. 1.0%; Prior was revised to -0.4% from -0.6%
• August NY Fed Empire State Manufacturing -4.7; Prior -6.6
• July Capacity Utilization 77.8% (Briefing.com consensus 78.6%); Prior was revised to 78.4% from 78.8%, July Industrial Production -0.6% (Briefing.com consensus 0.1%); Prior was revised to 0.3% from 0.6%
  • The key takeaway from the report is the understanding that it was depressed by Hurricane Beryl, which reduced industrial production by an estimated 0.3 percentage point and manufacturing output by an estimated 0.3 percent. Industrial production wasn't strong in July, but taking the effects of the hurricane into account, it wasn't as weak as it seems either.
• June Business Inventories 0.3% (Briefing.com consensus 0.2%); Prior 0.5%
• August NAHB Housing Market Index 39 (Briefing.com consensus 43); Prior was revised to 41 from 42