Stock Market Update

[BRIEFING.COM] The S&P 500 (+0.7%), Nasdaq Composite (+0.4%), and DJIA (+1.2%) have reclaimed their 50-day moving averages in today's trade as solid gains throughout the broader market now outweigh the now modest loss of the information technology sector (-0.4%). 

The S&P 500 and DJIA moved above the key technical level earlier in today's session, while weakness across tech names kept the Nasdaq Composite in negative territory. The market was spurred once Nasdaq finally moved across its own 50-day moving average, which has the major averages now charting session highs. 

Participation is broad, with advancers outpacing decliners by a roughly 4-to-1 ratio on the NYSE and a roughly 2-to-1 clip on the Nasdaq. 

Eight S&P 500 sectors trade higher as a result, all of which hold gains wider than 1.0%. 

The health care sector (+2.0%) continues its recent trend of outperformance on days when the AI trade struggles, widening its month-to-date gain to 9.8%. 

The consumer discretionary sector (+1.8%) holds a similar gain as all of its components tick higher. Amazon (AMZN 229.41, +3.13, +1.39%) and Tesla (TSLA 418.91, +1.13, +0.27%) both tick higher, though mega-cap strength is not the driving force of today's gains. 

Meta Platforms (META 629.87, +16.82, +2.74%) holds the highest gains of the "magnificent seven" group, moving higher following a report by The Information this morning that stated Meta is interested in buying AI chips from Alphabet (GOOG 322.07, +3.60, +1.13%) as the company looks to compete with NVIDIA (NVDA 176.10, -6.45, -3.53%) in the chip space. 

The headline set up early weakness for chipmakers, with NVIDIA and Advanced Micro Devices (AMD 201.25, -13.80, -6.42%) lagging despite substantial improvements to the technology sector. The PHLX Semiconductor Index is still down 0.6% today. 

Despite the losses in chipmakers, the broader market hasn't skipped a beat. Rotation into other pockets of the market has more than offset the tech weakness, giving the market enough fuel to drive the major averages back above their 50-day moving averages. The willingness of buyers to step in outside of the AI complex underscores a market that remains resilient beneath the surface as participation broadens.

On the macro front, stocks continue to benefit from firming December rate-cut expectations, with the CME FedWatch tool showing an 82.7% probability of a 25-basis-point rate reduction at the next FOMC meeting, down slightly from 84.4% yesterday. 

Fed Governor Stephen Miran (voting FOMC member) told CNBC that he will not dissent at the next meeting in favor of a larger rate cut because there are other FOMC members who will vote to keep rates unchanged.

In other Fed news, Bloomberg reported that National Economic Council Director Kevin Hassett has emerged as a frontrunner for the next Fed Chair nomination.

Reviewing today's data:

• The Conference Board's Consumer Confidence Index dropped to 88.7 in November (Briefing.com consensus 93.3) from an upwardly revised 95.5 (from 94.6) in October. In the same period a year ago, the index stood at 112.8.
  • The key takeaway from the report is that there was a further deterioration in the expectations index, with sentiment on business conditions, labor market conditions, and household income all trending negatively. That could portend a slowdown in discretionary spending activity.
• The Producer Price Index for final demand increased 0.3% month-over-month in September (Briefing.com consensus: 0.3%) following a 0.1% decline in August. That left the year-over-year change at 2.7% versus 2.6% in August. The Producer Price Index for final demand, less foods and energy, increased just 0.1% month-over-month (Briefing.com consensus: 0.2%) following a 0.1% decline in August. That left the year-over-year change at 2.6% versus 2.8% in August.
  
  • The key takeaway from the report is that inflation at the wholesale level is still sticky, highlighted by a 1.1% month-over-month increase in the final demand foods index, which was up 4.0% year-over-year, shedding light on why many consumers, seeing the pass-through at grocery stores, are not aligned with the thinking that inflation is being brought under control.
• Retail sales were up 0.2% month-over-month in September (Briefing.com consensus 0.4%) after increasing 0.6% in August. Excluding autos, retail sales were up 0.3%, as expected, following a downwardly revised 0.6% increase (from 0.7%) in August.
  • The key takeaway is that gasoline station sales were a big driver of the monthly increase. Excluding gasoline station sales, retail sales were flat in September after increasing 0.6% in August, signaling a slowdown in consumer spending on goods.
• The September FHFA Housing Price Index was unchanged in September (Briefing.com consensus 0.3%) from a prior increase of 0.4%.
• The September S&P Case-Shiller Home Price Index increased 1.4% (Briefing.com consensus 1.6%) from a prior increase of 1.6%.
• October Pending Home Sales increased 1.9% (Briefing.com consensus 0.0%) from an upwardly revised 0.1% increase in September (from 0.0%).