Stock Market Update

[BRIEFING.COM] The stock market looks mixed, but it is actually better than it looks. An underperforming information technology sector (-0.8%), and some weakness in select mega-cap stocks, has impeded some of today's upside bias, which can be seen clearly in market internals.

Advancers lead decliners by a better than 2-to-1 margin at the NYSE and by a 13-to-7 margin at the Nasdaq; the equal-weighted S&P 500 has traded to a new record high; and the Russell 2000 is up 1.1%.

Until recently, 10 of the 11 other S&P 500 sectors were showing a gain, benefiting it seems at the expense of the tech stocks and mega-cap stocks. That standing has weakened a bit. Now, there are eight sectors trading higher. The consumer discretionary sector (-0.1%), which houses Amazon.com (AMZN 187.71, -3.45, -1.8%), and the consumer staples sector (-0.1%) are the other two laggards.

Today's broad-based buying interest was bolstered by some pleasing economic data that featured moderating PCE price inflation and stronger-than-expected consumer sentiment. There was also some carryover optimism related to China's policy stimulus party, which led to the best showing for the Chinese market this week since 2008.

The economic optimism has been the driver of the outperformance of the small-cap stocks and value stocks.

The energy sector (+1.4%), which has been the worst-performing sector this week, month, and quarter, is today's best-performing sector, riding today's upbeat economic sentiment and rising oil ($68.13, +0.46, +0.7%) and natural gas ($2.90, +0.15, +5.6%) prices.

Other sector leaders include utilities (+1.0%), communication services (+0.7%), real estate (+0.5%), financials (+0.5%), and industrials (+0.4%).

Reviewing today's economic data:

• August Adv. Intl. Trade in Goods balance (actual -$94.3 bln; prior -$102.8 bln), Adv. Retail Inventories (actual 0.5%; prior 0.8%), and Adv. Wholesale Inventories (actual 0.2%; prior 0.3%).
• Personal income increased 0.2% month-over-month in August (Briefing.com consensus 0.4%) following a 0.3% increase in July. Personal spending increased 0.2% (Briefing.com consensus 0.3%) following a 0.5% increase in July. The PCE Price Index rose 0.1% month-over-month (Briefing.com consensus 0.1%) following a 0.2% increase in July. The core-PCE Price Index, which excludes food and energy, increased 0.1% (Briefing.com consensus 0.2%) following a 0.2% increase in July. On a year-over-year basis, the PCE Price Index was up 2.2%, versus 2.5% in July, while the core-PCE Price index was up 2.7%, versus 2.6% in July.
  • The key takeaway from the report is that it shows tame inflation figures that support the Fed's progress in getting inflation back to its 2% target on a sustainable basis.
• The final reading for the September University of Michigan Index of Consumer Sentiment reached 70.1 (Briefing.com consensus 69.0) versus the preliminary reading of 69.0. The final reading for August was 67.9. In the same period a year ago, the index stood at 67.8.
  • The key takeaway from the report is that consumer sentiment picked up in September, and has been picking up as inflation pressures have moderated.