Stock Market Update

[BRIEFING.COM] The stock market retreated today as the recent momentum unwind ultimately pressured the market lower after some choppy action this morning, with the S&P 500 (-0.9%), Nasdaq Composite (-0.8%), and DJIA (-1.2%) closing below their 50-day moving averages for the first time since April. 

The S&P 500 and Nasdaq Composite were able to reclaim their 50-day moving averages after slipping beneath them in the late morning, though stocks faced a steeper pullback in the afternoon hours, which sent the DJIA beneath the key support level as well. 

Dampened sentiment around the AI trade was once again at the core of today's retreat as NVIDIA (NVDA 186.60, -3.57, -1.88%) moved lower after Peter Thiel's fund, Thiel Macro LLC, fully divested its ~537,742-share stake in NVIDIA during the third quarter.

Chipmaker names struggled across the board as the PHLX Semiconductor Index closed with a 1.6% loss, widening its month-to-date slide to 7.2%. 

Elsewhere in the information technology sector (-1.4%), Apple (AAPL 267.46, -4.95, -1.82%) moved lower after Financial Times reported that CEO Tim Cook may step down as early as next year. 

Meanwhile, Dell (DELL 122.48, -11.28, -8.43%) and Hewlett Packard Enterprise (HPE 21.23, -1.60, -7.01%) finished with the widest losses in the sector after receiving downgrades from Morgan Stanley. 

Today's retreat became increasingly broad-based as the session progressed, as a total of nine S&P 500 sectors finished with losses, five of which fell more than 1.0%. 

The financials sector (-1.9%) ended up with the widest loss, facing pressure in nearly all of its components. American Express (AXP 341.25, -15.93, -4.46%) was a laggard after reporting its October card metrics, which saw a 0.3% increase in consumer card member loan write-offs, while U.S. Small Business Card member loans net write-offs increased 0.1%.

Digital cryptocurrency exchange Coinbase Global (COIN 263.95, -20.05, -7.06%) was among the worst-performing S&P 500 names as Bitcoin continued its recent slide, with today's loss wiping out its year-to-date gain. 

As for today's slim batch of winners, the communication services sector (+1.1%) led for the entirety of the session as Alphabet (GOOG 285.60, +8.62, +3.11%) moved higher after Berkshire Hathaway Inc. (BRK-B 503.29, -5.65, -1.11%) disclosed a new $4.9 billion position in the company. 

Meanwhile, the utilities sector (+0.8%) also managed a gain as investors sought more defensive positions. 

Outside of the S&P 500, the Russell 2000 (-2.0%) and S&P Mid Cap 400 (-1.8%) faced outsized losses as the market displayed a firm risk-off posturing today. 

The VIX Volatility Index surged 14.3% to 22.67, implying a heightened sense of uncertainty in the market. 

On the macro front, Fed Vice Chair Philip Jefferson (voting FOMC member) struck a similarly cautious tone to other recent Fed speakers. Mr. Jefferson said in a speech this morning that he backed last month's 25-basis-point rate cut but emphasized that "the evolving balance of risks underscores the need to proceed slowly as we approach the neutral rate."

Just before the close, Fed Governor Christopher Waller (voting FOMC member) said in a speech that he supports another rate cut in December for risk management reasons. The headline helped stocks finish off of their session lows and saw the market's implied odds of a December rate cut increase slightly from earlier levels. The CME FedWatch Tool now assigns a 44.9% probability to a 25-basis point rate cut in December, little changed from Friday's 44.4% odds. 

Ultimately today's action reflected a market still struggling to find its footing as leadership rotates and sentiment resets. The major averages closing beneath their 50-day averages marks a significant break from a trend that has persisted since the market began its rebound effort in April. With NVIDIA's earnings and key economic data on deck later this week, the next few sessions will go a long way in determining whether this pullback deepens or simply marks another shakeout in the broader uptrend.

U.S. Treasuries vacillated today but maintained a mostly positive bias. The 2-year note yield finished unchanged at 3.61%, and the 10-year note yield settled down two basis points to 4.13%. 

• Nasdaq Composite: +17.6% YTD
• S&P 500: +13.4% YTD
• DJIA: +9.5% YTD
• Russell 2000: +5.0% YTD
• S&P Mid Cap 400: +0.8% YTD

Reviewing today's data:

• November NY Empire State Manufacturing Index (Actual 18.7; Briefing.com consensus: 6.1; Prior 10.7)
• Total construction spending increased 0.2% month-over-month in August (Briefing.com consensus: 0.1%) following an upwardly revised 0.2% increase (from -0.1%) in July. Total private construction was up 0.3% month-over-month, while total public construction was flat month-over-month. On a year-over-year basis, total construction spending was down 1.6%.
  • The key takeaway from the report is that the increase in spending came solely from the residential side; unfortunately, that did not include new single-family construction activity. The strength was concentrated in new multifamily construction.