Stock Market Update

[BRIEFING.COM] The stock market mounted an impressive intraday reversal from steep opening losses, with the S&P 500 (-0.2%), Nasdaq Composite (-0.8%), and DJIA (+0.4%) finishing mixed as weakness in tech and mega-cap names weighed against broader strength. 

Futures fell sharply this morning after Reuters reported that China sanctioned five U.S.-linked subsidiaries of South Korea's Hanwha Ocean, reversing yesterday's optimism sparked by President Trump's reassuring remarks about China.

While there were no headline catalysts around the China situation to prompt the comeback, the lack of headlines around the matter left the market free to focus on a variety of other developments today, with a strong "buy the dip" move coming into play. 

Q3 earnings started off on solid footing as a slate of major banks reported earnings before the open. Wells Fargo (WFC 84.56, +5.64, +7.15%) was the top-mover in the S&P 500 today after beating on EPS and revenue expectations, with Citigroup (C 99.84, +3.74, +3.89%) also capturing a solid post-earnings gain. Goldman Sachs (GS 770.76, -16.02, -2.04%) and JPMorgan Chase (JPM 302.08, -5.89, -1.91%) faced some profit-taking after earnings beats of their own, but closed well off their session lows. 

While the financials sector (+1.1%) did not finish with the widest gain today, its move into positive territory from an early loss helped the major averages reverse their downward course. 

The consumer staples sector (+1.7%) did not need to reverse course today, as it traded higher this morning while the rest of the market lagged. Walmart (WMT 107.21, +5.09, +4.98%) captured a nice gain after announcing a partnership with OpenAI, joining a recent wave of collaborations with the company that have lifted several tech names in recent weeks. 

Elsewhere, the industrials (+1.2%), real estate (+1.1%), utilities (+0.9%) and materials (+0.9%) sectors also finished with solid gains. 

The information technology (-1.6%) and consumer discretionary (-0.3%) sectors finished with losses, as some nagging mega-cap weakness pulled the consumer discretionary sector back beneath its flat line late in the session. 

The Vanguard Mega Cap Growth ETF finished with a 0.8% loss, and the S&P 500 Equal Weighted Index (+0.8%) comfortably outpaced the market-weighted S&P 500 (-0.2%). 

NVIDIA (NVDA 180.01, -8.31, -4.41%) was a notable laggard, contributing to a 2.3% retreat in the PHLX Semiconductor Index. 

Separately, the energy sector (-0.1%) finished slightly lower as crude oil futures settled today's session $0.67 lower (-1.1%) at $58.77 per barrel. 

The market also benefited from a decent amount of commentary from Fed officials today, which kept the market's expectations for further easing this year steady. 

Fed Chair Jerome Powell (FOMC voting member) said in a speech today that downside risks to the job market have risen, while Boston Fed President Susan Collins (FOMC voting member) said modest rate cuts are warranted as inflation eases while hiring has weakened. 

The probability of a 25-basis-point rate cut at the October FOMC meeting remained at a sturdy 96.7%, according to the CME FedWatch Tool.

The steadfastness of current rate cut expectations was especially beneficial to smaller-cap names today, as the Russell 2000 (+1.4%) and S&P Mid Cap 400 (+0.9%) both outperformed. 

U.S. Treasuries started the session with some safe-haven support, holding on to the bulk of their overnight gains in a bull steepener trade that was rooted in rate cut optimism. The 2-year note yield settled down four basis points to 3.48%, and the 10-year note yield settled down three basis points to 4.02%. 

• Nasdaq Composite: +16.6% YTD
• S&P 500: + 13.0% YTD
• Russell 2000: +11.9% YTD
• DJIA: +8.8% YTD
• S&P Mid Cap 400: +4.3% YTD

Reviewing today's data:

• September NFIB Small Business Optimism 98.8; Prior 100.8