Stock Market Update

[BRIEFING.COM] The stock market started the day on a higher note, but gains faded quickly as participants responded to the economic releases at 10:00 ET. Treasury yields turned sharply higher after a stronger-than-expected ISM Services PMI reading for December and a November JOLTS - Job Openings Report that showed a noticeable increase in job openings.

The added wrinkle in the ISM Services PMI is that it also featured a notable pickup in the Prices Index (to 64.4% from 58.2%), which topped the 60.0% level for the first time since January 2024. The 10-yr yield was at 4.63% ahead of the data and sits at 4.68% now.

Outsized losses in many mega cap names have contributed to the downside bias. The Vanguard Mega Cap Growth ETF (MGK) trades 1.8% lower.

Apple (AAPL 241.50, -3.49, -1.4%), which was downgraded to Sell from Neutral at MoffettNathanson, and Tesla (TSLA 394.81, -16.31, -4.0%), which was downgraded to Neutral from Buy at BofA Securities, into other areas of the market.

NVIDIA (NVDA 141.97, -7.46, -5.0%) is another influential loser after trading up as much as 2.5% earlier following Jensen Huang's keynote address last night at the Consumer Electronics Show.

Losses in the aforementioned names have pinned their respective S&P 500 sectors to last place on the leaderboard among the 11 sectors. Consumer discretionary (-1.8%) and information technology (-1.7%) are the only sectors trading down more than 0.6%. 

On the flip side, the energy sector leads the pack by a wide margin, showing a 1.4% gain. Health care stocks are also showing some strength, leading the sector to trade 0.6% higher.

Reviewing today's economic data:

• November Trade Balance -$78.2 bln (Briefing.com consensus -$77.9 bln); Prior was revised to -$73.6 bln from -$73.8 bln
  • The key takeaway from the report is that the import surge likely reflects a bid to get ahead of President-elect Trump's tariff plans, meaning businesses might have more inventory than usual waiting to be utilized/sold that detracts from import demand in coming months (i.e., post-inauguration).
• December ISM Services 54.1% (Briefing.com consensus 53.0%); Prior 52.1%
  • The key takeaway from the report is that it was a double-whammy for rate cut expectations in that the expansion in services sector activity accelerated while the prices index picked up noticeably, printing its first reading above 60.0% since January 2024.
• November JOLTS - Job Openings 8.098 mln; Prior was revised to 7.839 mln from 7.744 mln