Stock Market Update

[BRIEFING.COM] The stock market faced a relatively broad retreat today with losses paced by mega-cap and tech names, sending the S&P 500 (-1.2%), Nasdaq Composite (-2.0%), and DJIA (-0.5%) firmly lower. 

The market's reaction to Palantir Technologies' (PLTR 190.73, -16.45, -7.94%) earnings report provided the spark for the broader pullback in the AI trade. The report itself was not indicative of a retreat, as the company crushed earnings expectations and raised its guidance. Instead, the sell-off seemed tied to valuation concerns and some profit-taking after an impressive run this year. Even after today's pullback, the stock still trades at a forward price-to-earnings ratio of over 200x. 

Palantir's move set the stage for some profit-taking across other AI-related and growth names, many of which are also components of the information technology sector (-2.3%). 

Chipmakers faced considerable pressure throughout the session, pushing the PHLX Semiconductor Index 4.0% lower. NVIDIA (NVDA 198.69, -8.19, -3.96%) was one of six "magnificent seven" names to trade lower, and Advanced Micro Devices (AMD 250.05, -9.60, -3.70%) retreated ahead of its earnings report after the close. 

Apple (AAPL 270.04, +0.99, +0.37%) was the only Magnificent Seven name to close with a gain, supported by a Bloomberg report that the company is developing a cheaper MacBook to compete with the Chromebook and other more affordable laptops. 

The consumer discretionary sector (-1.9%) faced the next widest loss, pressured by Tesla's (TSLA 444.26, -24.11, -5.15%) weakness. Elsewhere in the sector, Norwegian Cruise Line (NCLH 18.79, -3.39, -15.28%) finished as the worst-performing name in the S&P 500 after beating EPS expectations but missing on revenues and issuing disappointing guidance, bringing other cruise line names lower in sympathy. 

The communication services sector (-1.5%) saw both of its mega-cap components finish lower. The Vanguard Mega Cap Growth ETF closed with a 1.8% loss. 

Elsewhere, the industrials sector (-1.2%) faced some sell-the-news pressure from Uber's (UBER 94.67, -5.05, -5.06%) earnings report, while the energy sector (-0.9%) saw weakness in Marathon Petroleum (MPC 184.50, -11.28, -5.76%) after an earnings miss. 

The materials (-0.4%) and utilities (-0.4%) sectors closed with more modest losses. 

Meanwhile, four S&P 500 sectors closed with modest gains, benefitting from a combination of earnings-related moves and a general rotation into more defensive sectors. 

The financials sector (+0.6%) finished at the top of the standings, supported by a solid move in Apollo Global Management (APO 130.52, +6.57, +5.30%) after an earnings beat. 

The consumer staples (+0.5%) and health care (+0.3%) sectors posted similar gains, while the real estate sector (-0.3%) advanced more modestly. 

Outside of the S&P 500, the small-cap Russell 2000 (-1.8%) and S&P Mid Cap 400 (-0.9%) also retreated today. 

Decliners outpaced advancers by a roughly 2-to-1 ratio on the NYSE and a 3-to-1 clip on the Nasdaq, highlighting the scope of today's weakness. However, negative breadth has plagued the market for the past several sessions, though the outsized influence of the mega-caps over the major averages largely prevented index-level losses before today's session. The trend of mega-cap dominance came to a halt today, with the S&P 500 Equal Weighted Index (-0.7%) outperforming the market-weighted S&P 500 (-1.2%).

The market did not mount a buy-the-dip effort this afternoon, as the absence of meaningful macro catalysts left investors focused squarely on stretched valuations, allowing profit-taking to take hold and broadening the pullback beyond the recent AI leadership.

U.S. Treasuries recorded modest gains on Tuesday after spending the session in a narrow range near their starting levels. The 2-year note yield settled down two basis points to 3.58%, and the 10-year note yield settled down two basis points to 4.09%.

• Nasdaq Composite: +20.9% YTD
• S&P 500: +15.1% YTD
• DJIA: +10.7% YTD
• Russell 2000: +8.8% YTD
• S&P Mid Cap 400: +3.0% YTD