Stock Market Update

[BRIEFING.COM] The stock market acted today as if it was biding its time in front of some key happenings that should make for more excitable trading action in Wednesday's trade. In terms of today's trade, it featured modest losses for the major indices that broke an eight-session winning streak for the S&P 500 and Nasdaq Composite.

It was effectively a consolidation trade with neither buyers nor sellers showing a great deal of conviction at the index level.

Outsized moves were reserved for individual stocks like Palo Alto Networks (PANW 368.01, +24.65, +7.2%), which impressed with earnings results and guidance, Eli Lilly (LLY 949.97, +28.16, +3.1%), which impressed with news that tirzepatide reduced the risk of developing type 2 diabetes by 94% in adults with pre-diabetes, and Boeing (BA 172.09, -7.55, -4.2%), which got hit by a Bloomberg report indicating the aircraft manufacturer paused test flights of its 777X to investigate cracks in a key part.

Home improvement retailer Lowe's (LOW 240.32, -2.89, -1.2%) was another story stock, losing ground after issuing disappointing FY25 guidance, yet its losses were not material.

From a sector standpoint, the only material move today was made by the energy sector (-2.7%). Losses were registered by every component in what looked like a basket trade to reduce exposure. WTI crude futures were down just 0.8% to $73.17/bbl.

Outside of the energy sector, the biggest moves were made by the consumer staples (+0.5%) and materials (-0.4%) sectors.

Today's lack of conviction was reflected in the relatively light volume totals at the NYSE and Nasdaq; whereas, today's lack of buying interest was reflected in an advance-decline line that favored decliners by a nearly 2-to-1 margin at the NYSE and Nasdaq.

The Treasury market put together a nice day with yields sliding across the curve. Participants engaged the notion that many of the world's leading central banks -- and the Federal Reserve in particular -- are shifting (or soon will be) to a less restrictive policy stance. The 2-yr note yield dropped seven basis points to 4.00% and the 10-yr note yield fell five basis points to 3.82%.

The impending shift for the Fed, which has held rates higher for longer than other central banks, continues to take a toll on the dollar, which lost ground against the euro, the yen, and pound sterling again today. The U.S. Dollar Index was down 0.5% at 101.48, leaving it down 4.2% for the quarter and trading at its lowest level since the start of the year.

There was a pickup in hedging interest today, evidenced by the 8.0% jump in the CBOE Volatility Index ("VIX") to 15.82.

The pickup in the VIX came ahead of Wednesday's main events, which include the earnings reports from Target (TGT 144.44, -0.19, -0.1%), Macy's (M 17.74, -0.08, -0.5%), and TJX Cos. (TJX 113.31, +0.82, +0.7%) before the open, the release of benchmark revisions to nonfarm payrolls for April 2023-March 2024 at 10:00 a.m. ET, the $16 billion 20-yr bond auction at 1:00 p.m. ET, and the release of the Minutes for the July 30-31 FOMC meeting at 2:00 p.m. ET.

There was no U.S. economic data of note today.

• Nasdaq Composite: +18.7% YTD
• S&P 500: +17.3% YTD
• S&P Midcap 400: +8.3% YTD
• Dow Jones Industrial Average: +8.3% YTD
• Russell 2000: +5.7% YTD