Stock Market Update

[BRIEFING.COM] The stock market started the day with gains across the board at the index level, as yesterday's positive momentum set the stage for continued upside moves. The cooler-than-expected inflation data released at 8:30 ET, coupled with stable Treasury yields, helped bolster the positive sentiment across equities.

The December Producer Price Index (PPI) readings exceeded expectations, offering a glimpse of easing inflationary pressures on a month-to-month basis, while Treasury yields held steady near pre-report levels. The 10-yr yield, which is most sensitive to changes in inflation dynamics, stood at 4.79% ahead of the report and sits at 4.80%, unchanged from yesterday.

Things look different at the index level now after the S&P 500 (-0.2%) and Nasdaq Composite (-0.4%) moved to negative territory due to turnover in the mega cap space. The overall vibe in the market is still positive, though. Advancers lead decliners by a 2-to-1 margin at the NYSE and by an 11-to-10 margin at the Nasdaq. The equal-weighted S&P 500 trades 0.4% higher.

Meta Platforms (META 591.89, -16.43, -2.7%) and Eli Lilly (LLY 737.78, -59.70, -7.5%) are among the influential losers in the mega cap space. Meta saw its shares drop after news that TikTok US would not be sold, including to potential buyer Elon Musk. Eli Lilly trades down following the downward revision of its Q4 revenue guidance.

Other areas of the market have outperformed with specific catalysts. Bank stocks are standouts in that respect, trading up in front of earnings reports from big names in the space this week. The SPDR S&P Bank ETF (KBE) sports a 2.5% gain.

JPMorgan (JPM 245.00, +0.79, +0.3%), Wells Fargo (WFC 71.12, +0.59, +0.8%), and others have supported the S&P 500 financial sector (+0.8%) in front of their earnings reports tomorrow. It is among the top performing sectors along with utilities (+1.3%) and real estate (+0.7%).

Reviewing today's economic data:

• December NFIB Small Business Optimism 105.1; Prior 101.7
• December PPI 0.2% (Briefing.com consensus 0.3%); Prior 0.4%, December Core PPI 0.0% (Briefing.com consensus 0.2%); Prior 0.2%
  • The key takeaway from the report is that the better-than-expected monthly readings have been clouded by the less inspiring year-over-year readings, as well as the understanding that inflation at the wholesale level moved in the wrong direction in 2024 (versus 2023) and remains elevated relative to the Fed's 2% inflation target.