Stock Market Update

[BRIEFING.COM] The stock market is in good form today, reclaiming some lost ground after sharp declines had the S&P 500 nearing correction territory. The Nasdaq Composite trades 2.2% higher, the S&P 500 sports a 2.0% gain, the Dow Jones Industrial Average is up 1.5%, and the Russell 2000 shows a 1.4% gain.

Yesterday's slump in equities was partially due to the yen's rapid strengthening against the dollar, which precipitated the plunge in Japan's Nikkei. The yen has weakened slightly against the dollar today, acting as support for US equities and helping drive a 10% move higher in the Nikkei. The USD/JPY pair trade is +0.7% to 145.15.

Also, the CBOE Volatility Index, which spiked above 65.00 yesterday before returning to the 35.00 area, pulled back to 25.22 today. 

Positive responses to earnings news from Uber (UBER 64.37, +5.86, +10.0%), Caterpillar (CAT 330.49, +13.69, +4.3%), and others have aided the upside bias, along with the observation from San Francisco Fed President Daly (FOMC voter) that policy adjustments will be necessary in the coming quarter.

Treasury yields are higher after a sharp move lower last week, which has acted as support for equities. The 2-yr note yield is up 12 basis points to 4.00% and the 10-yr note yield is up ten basis points to 3.89%.

Robust buying activity has all 11 S&P 500 sectors higher by at least 1.0%.

Reviewing today's economic data:

• June Trade Balance -$73.1 bln (Briefing.com consensus -$72.8 bln); Prior was revised to -$75.0 bln from -$75.1 bln
  • The key takeaway from the report, though, is that both exports and imports increased in June, which is a constructive trade dynamic for the global economy.