Stock Market Update

[BRIEFING.COM] The Nasdaq Composite has trailed its peers while the S&P 500 and Dow Jones Industrial Average trade up.

Positive responses to earnings from Meta Platforms (META 705.36, +29.12, +4.3%) and Tesla (TSLA 406.02, +16.92, +4.3%) have supported the broader equity market. Meanwhile, Microsoft (MSFT 420.59, -21.70, -4.9%) shows a solid decline after reporting results, weighing down the S&P 500 information technology sector (-1.2%) despite a big earnings-related gain in IBM (IBM 255.65, +27.05, +11.8%).

It's the only sector trading lower while the price action in META and Alphabet (GOOG 201.26, +4.08, +2.1%) have boosted the communication services sector (+0.9%), which is among the top performers along with the rate-sensitive real estate (+1.7%) and utilities (+1.7%) sectors, which are responding to the price action in Treasuries.

The 10-yr yield is down four basis points to 4.52% and the 2-yr yield is down two basis points to 4.21%.

The positive earnings news and price action in Treasuries has fueled broad buying interest, leading the equal-weighted S&P 500 to trade to 1.0% higher. An encouragingly low level of initial jobless claims (207,000) for the week ending January 25 has also helped the upside bias in equities, along with a refreshingly strong 4.2% growth rate for personal spending in the fourth quarter, which was the best since Q1 2023.

Reviewing today's economic data: 

• Q4 GDP-Adv. 2.3% (Briefing.com consensus 2.3%); Prior 3.1%, Q4 GDP Deflator-Adv. 2.2% (Briefing.com consensus 2.4%); Prior 1.9%
  • The key takeaway from the report is that there were stronger growth attributes in the fourth quarter than the headline number suggests. To that end, personal consumption expenditures were up 4.2% -- the strongest since Q1 2023 -- and real final sales of domestic product, which excludes the change in private inventories, was up 3.2%.
• Weekly Initial Claims 207K (Briefing.com consensus 221K); Prior 223K, Weekly Continuing Claims 1.858 mln; Prior was revised to 1.900 mln from 1.899 mln
  
  • The key takeaway from the report is the low level of initial jobless claims -- a leading indicator -- which is a good signal for growth prospects, as it conveys a reluctance on the part of employers to let employees go.
• December Pending Home Sales -5.5% (Briefing.com consensus 0.8%); Prior was revised to 1.6% from 2.2%