Stock Market Update

[BRIEFING.COM] There were some familiar sightings today. The People's Bank of China provided another piece of policy stimulus, cutting its Medium-Term Lending Facility by 30 basis points to 2.00%, and NVIDIA (NVDA 123.51, +2.64, +2.2%) continued to outperform. Both provided a measure of support for the stock market, yet neither was enough to excite the buying masses.

The major indices trudged through a lackluster session, succumbing to some consolidation interest that had the Dow, S&P 500, and Russell 2000 trading in negative territory for the bulk of today's trade. The Nasdaq for its part kept its ahead above water most of the day, riding on NVDIA's shoulders.

Still, market internals reflected a more cautious-minded tape. Decliners outpaced advancers by a better than 2-to-1 margin at the NYSE and Nasdaq; the equal-weighted S&P 500 declined 0.6%; the Russell 2000 declined 1.2%; and there were only two S&P 500 sectors that escaped with a gain: the utilities sector and information technology sector, both of which advanced 0.5%.

The "market" had the benefit of the information technology sector exhibiting relative strength, yet the broader market passed on rallying around it. 

Nine of the 11 S&P 500 sectors finished with a loss. The energy sector (-1.9%) had the biggest struggle, keeping track with oil prices that slid despite reports of Hezbollah firing a missile at Tel Aviv, which was ultimately intercepted by Israel, and Israel teasing the possibility of moving ground troops into Lebanon. WTI crude futures dropped 2.5% to $69.78/bbl.

The health care sector (-0.9%) was another weak link, hurt by losses in Amgen (AMGN 312.86, -18.06, -5.5%), which reported disappointing data for two drugs, according to CNBC. Other laggards of note included the cyclical materials (-0.6%), financial (-0.6%), and industrials (-0.5%) sectors.

The consumer discretionary sector (-0.4%) was aided by Tesla (TSLA 257.02, +2.75, +1.1%), but its strength was not enough to overcome a pullback in Amazon.com (AMZN 192.53, -1.43, -0.7%), and losses in Ford (F 10.42, -0.45, -4.1%) and General Motors (GM 45.72, -2.35, -4.9%), which were downgraded at Morgan Stanley on concerns about Chinese competition and deteriorating credit quality in the U.S. Morgan Stanley also downgraded Rivian Automotive (RIVN 11.03, -0.81, -6.8%).

Homebuilders also dragged on the consumer discretionary sector even though new home sales in August were stronger than expected. A disappointing earnings report from KB Home (KBH 82.75, -4.68, -5.4%) acted as an offset.

Like the stock market, there wasn't much buying vigor in the Treasury market either. The 2-yr note yield settled the cash session unchanged at 3.55% while the 10-yr note yield jumped five basis points to 3.78% in a continued curve-steepening trade.

The $70 billion 5-yr note auction didn't cause much of a stir. Like the 2-yr note auction yesterday, the 5-yr note auction saw the high yield of 3.519% match the when-issued yield.

• Nasdaq Composite: +20.5%
• S&P 500: +20.0%
• Dow Jones Industrial Average: +11.3%
• S&P Midcap 400: +11.1%
• Russell 2000: +8.4%

Reviewing today's economic data:

• MBA Mortgage Applications Index +11.0% wk/wk with refinance applications +20% and purchase applications +1%
• August New Home Sales 716K (Briefing.com consensus 695K); Prior was revised to 751K from 739K
  • The key takeaway from the report is that new home sales, which are tabulated when contracts are signed, were better than expected in August, aided by lower pricing and sliding mortgage rates. Notably, the South was the only region that saw a pickup in sales month-to-month.

Looking ahead, Thursday's calendar features:

• 08:30 ET: Q2 GDP -- third estimate (Briefing.com consensus 3.0%; prior 3.0%) and Q2 GDP Deflator -- third estimate (Briefing.com consensus 2.5%; prior 2.5%)
• 08:30 ET: August Durable Orders (Briefing.com consensus -2.9%; prior 9.9%) and Durable Orders ex-transportation (Briefing.com consensus 0.1%; prior -0.2%)
• 08:30 ET: Weekly Initial Claims (Briefing.com consensus 224,000; prior 219,000) and Continuing Claims (prior 1.829 mln)
• 10:00 ET: August Pending Home Sales (Briefing.com consensus 1.0%; prior -5.5%)
• 10:30 ET: Weekly natural gas inventories (prior +58 bcf)
• 13:00 ET: $44 bln 7-yr Treasury note auction results