Stock Market Update

[BRIEFING.COM] The stock market had a decidedly strong showing. The S&P 500 (+1.7%) and Dow Jones Industrial Average (+1.3%) reached fresh all-time highs and the Nasdaq Composite climbed 2.5%.

The rally was in response to yesterday's decision by the FOMC to cut the target rate for the fed funds rate by 50 basis points to 4.75-5.00%. Today's gains also reflected a belief that the economy is in good shape and the Fed will cut rates as needed to maintain a solid economic backdrop. This morning's data supported this optimistic view.

Weekly jobless claims remain steady below recession-like levels, the Philadelphia Fed Index tipped back into expansion (i.e. above 0.0 reading) in September, and existing home sales were slightly below expectations in August, but still reflected a tight market.

Just about everything came along for the upside ride, boosted by a fear of missing out on further gains, along with strength in the mega caps and chipmakers. The Vanguard Mega Cap Growth ETF (MGK) rose 2.5% and the PHLX Semiconductor Index (SOX) jumped 4.3%.

Apple (AAPL 228.87, +8.18, +3.7%), which traded up after T-Mobile's (TMUS 199.64, +2.96, +1.5%) CEO indicated iPhone 16 sales in the first week were better than last year's models, was a winning standout from the space.

This price action led the S&P 500 information technology sector to close 3.1% higher. The consumer discretionary (+2.2%), communication services (+1.9%), and industrials (+1.8%) sectors were the next best performers.

Meanwhile, defensive-oriented sectors like utilities (-0.6%) and consumer staples (-0.6%) underperformed today, reflecting a more risk-on vibe in the market.

The 10-yr yield settled five basis points higher at 3.73% and the 2-yr yield settled unchanged at 3.60%.

• Nasdaq Composite: +20.0% YTD
• S&P 500: +19.8% YTD
• S&P Midcap 400: +12.3% YTD
• Dow Jones Industrial Average: +11.5% YTD
• Russell 2000: +11.1% YTD

Reviewing today's economic data:

• Weekly Initial Claims 219K (Briefing.com consensus 232K); Prior was revised to 231K from 230K, Weekly Continuing Claims 1.829 mln; Prior was revised to 1.843 mln from 1.850 mln
  • The key takeaway from the report is that there is nothing in the low initial claims reading that, as Fed Chair Powell might agree, suggests the likelihood of a recession, or downturn in the economy, is elevated.
• Q2 Current Account Balance -$266.8 bln; Prior was revised to -$241.0 bln from -$237.6 bln
• September Philadelphia Fed Index 1.7 (Briefing.com consensus 3.0); Prior -7.0
• August Existing Home Sales 3.86 mln (Briefing.com consensus 3.90 mln); Prior was revised to 3.96 mln from 3.95 mln
  • The key takeaway from the report is that more inventory is becoming available with mortgage rates dropping, yet it is still a tight market, evidenced by the ongoing increase in the median home price.
• August Leading Homes Sales -0.2% (Briefing.com consensus -0.3%); Prior -0.6%

Looking ahead, there is no US economic data of note on Friday.