Stock Market Update

[BRIEFING.COM] Today's trade features a positive bias, but moves at the index level have been muted so far. The three major indices trade higher than prior closing levels and the Russell 2000 outperforms, showing a 0.8% gain. 

Advancers lead decliners by a better than 2-to-1 margin at the NYSE and by a 3-to-2 margin at the Nasdaq.

Ongoing momentum following a big run this week has contributed to the positive bias. The S&P 500 is 3.1% higher than last Friday's close and the Nasdaq Composite sports a 4.8% gain since last Friday. The price action in NVIDIA (NVDA 119.09, +2.18, +1.9%) has been an important support factor all week. Shares are 15.8% higher for the week, fueling buy-the-dip interest in other semiconductor-related names as well. 

The PHLX Semiconductor Index (SOX), which is fractionally higher today, shows a 8.5% gain on the week. 

Today's buying follows some relatively pleasing economic data this morning. Initial jobless claims held fairly steady (and relatively low) at 230,000, and the August Producer Price Index (PPI) revealed moderating price pressures at the wholesale level with PPI up 1.7% year-over-year versus 2.1% in July. Core-PPI, which excludes food and energy, was up 2.4% year-over-year versus 2.3% in July.

Nine S&P 500 sectors are higher led by communication services (+1.5%) and energy (+1.0%). The rate-sensitive real estate sector (-0.6%) shows the largest loss.

Falling market rates have signaled growth concerns in recent weeks, so the jump in rates today has acted as additional support for equities. The 10-yr yield is up five basis points to 3.70% and the 2-yr yield is up four basis points to 3.69%.

Reviewing today's economic data:

• Weekly Initial Claims 230K (Briefing.com consensus of 229K); Prior was revised to 228K from 227K, Weekly Continuing Claims 1.850 mln; Prior was revised to 1.845 mln from 1.838 mln
  • The key takeaway from the report is that initial jobless claims remained fairly steady, underscoring the point that the labor market isn't suffering a material and rapid erosion that would challenge the soft landing view.
• August PPI 0.2% (Briefing.com consensus of 0.2%); Prior was revised to 0.0% from 0.1%, August Core PPI 0.3% (Briefing.com consensus 0.2%); Prior was revised to -0.2% from 0.0%
  • The key takeaway from the report is the recognition that inflation at the wholesale level is moderating, which lessens concerns about heightened pass-through pressures to the consumer.
• August Treasury Budget -$380.1 bln; Prior -$243.7 bln
  • The key takeaway from the report is that the U.S. government continues to run large budget deficits, which necessitates a large amount of Treasury issuance for government funding.