Stock Market Update

[BRIEFING.COM] The stock market initially moved higher today following some economic data that didn't disrupt the market's optimistic view on rate cuts and economic growth prospects. The retail sales and industrial production data for August was stronger than expected. 

Expectations for a 50 basis points rate cut tomorrow moved up to 65.0% from 62.0% yesterday, according to the CME FedWatch Tool.

The S&P 500 (-0.2%) has been slowly declining, though, after reaching a fresh all-time high at 5,670. The three major indices trade near session lows while the Russell 2000 outperforms, trading 0.9% higher.

Market breadth still shows a positive skew under the index surface, but margins have narrowed compared to earlier in the session. Shortly after the open, advancers lead decliners by a 5-to-2 margin at the NYSE and by a 2-to-1 margin at the Nasdaq. Now, advancers lead decliners by a 3-to-2 margin at the NYSE and at the Nasdaq. 

Index level deterioration also coincided with some mega cap names turning lower, either entering negative territory or extending early gains. NVIDIA (NVDA 116.06, -0.71, -0.6%) and Apple (AAPL 215.74, -0.56, -0.3%) are standouts in that respect.

Microsoft (MSFT 434.09, +2.86, +0.7%) has provided some offsetting support after news of a 10% increase to its quarterly dividend and a share buyback authorization up to $60 billion.

Treasury yields moved up in response to today's data. The 10-yr yield is up two basis points to 3.64% and the 2-yr yield is up five basis points to 3.61%.

Reviewing today's economic data:

• August Retail Sales 0.1% (Briefing.com consensus -0.2%); Prior was revised to 1.1% from 1.0%, August Retail Sales ex-auto 0.1% (Briefing.com consensus 0.2%); Prior 0.4%
  • The key takeaway from the report is that control group sales -- the component that factors into GDP -- were up a sturdy 0.3% following an upwardly revised 0.4% increase (from 0.3%) in July and 0.9% increase in June. There is no hard landing in those numbers.
• August Industrial Production 0.8% (Briefing.com consensus 0.1%); Prior was revised to -0.9% from -0.6%, August Capacity Utilization 78.0% (Briefing.com consensus 77.9%); Prior was revised to 77.4% from 77.8%
  • The key takeaway from the report is that industrial production snapped back in August, led by manufacturing output and a near 10% increase in the index of motor vehicles and parts, after being depressed by Hurricane Beryl in July.
• July Business Inventories 0.4% (Briefing.com consensus 0.4%); Prior 0.3%
• September NAHB Housing Market Index 41 (Briefing.com consensus 41); Prior 39