Stock Market Update

[BRIEFING.COM] The stock market opened to broad-based gains fueled by a strong beat-and-raise earnings report from NVIDIA (NVDA 183.74, -2.78, -1.49%), though a sharp intraday retreat has the broader market mostly lower just after midday. 

The S&P 500 (-0.6%), Nasdaq Composite (-0.9%), and DJIA (-0.4%) ceded their early gains that surpassed 1.0% and saw the major averages reclaim their 50-day moving averages. NVIDIA's move into negative territory is a driving catalyst of the retreat, as the stock previously held a gain that neared 5.0%. 

Pressure across chipmaker names pushes the PHLX Semiconductor Index (-2.7%) to a near inverse of its early gain. The broader information technology sector (-1.5%) is now at the bottom of today's leaderboard after holding the top spot with a gain that approached 3.0%. 

Nine S&P 500 sectors now trade lower. All eleven sectors held gains this morning amid impressive breadth figures, though decliners now outpace advancers by a roughly 2-to-1 ratio on the NYSE and the Nasdaq. 

The consumer staples sector (+0.9%) is the only real winner at this juncture. A solid earnings report from Walmart (WMT 106.22, +5.61, +5.58%) pushed the sector out to an early gain with the broader market, while its more defensive orientation has kept it resilient to the intraday sell-off. 

On the macro front, the market received a sizable batch of economic data this morning that painted a mixed picture of the labor market. The CME FedWatch Tool now assigns a 41.4% probability to a 25-basis point rate cut at the December FOMC meeting. While that is up from just 30.1% yesterday, the poor odds continue to act as a headwind for the market. 

Ultimately, the swift reversal in NVIDIA and its peers hints that the broader AI momentum unwind is regaining its footing. For now, it's a lingering headwind that keeps resurfacing whenever the market leans too heavily on growth leadership.

Reviewing today's data:

• The September employment report, which is certainly a lagging indicator this time, suggested the labor market was not falling apart in September. In fact, nonfarm payroll gains accelerated to 119,000 after declining by 4,000 in August.
  • This wasn't an abjectly strong report, nor was it an abjectly weak report. We wouldn't call it "just right" either, not with the uptick in the unemployment rate and the stalling out of average weekly hours worked, but the key takeaway is that this report wouldn't be enough to convince the more hawkish-minded Fed officials to cut rates in December.
• Initial jobless claims for the week ending November 15 decreased by 8,000 to a lowly 220,000. Continuing jobless claims for the week ending November 8 increased by 28,000 to a not-so-lowly 1.974 million, which is the highest since November 6, 2021.
  • The key takeaway from the report is that it corroborates the low firing, low hiring narrative hanging over the labor market.
• Existing home sales increased 1.2% month-over-month in October to a seasonally adjusted annual rate of 4.10 million (Briefing.com consensus 4.08 million) from a downwardly revised 4.05 million (from 4.06 million) in September. Sales were up 1.7% on a year-over-year basis.
  • The key takeaway from the report is that home sales in October were aided by lower mortgage rates, yet limited inventory in some regions, combined with high prices in others, got in the way of stronger selling activity.