Stock Market Update

[BRIEFING.COM] The major indices have struggled today, weighed down by continued selling of the mega-cap stocks and growth stocks. That selling has been precipitated by some earnings/guidance disappointments, but it is primarily a case of momentum cutting the other way.

The indices had been carried to record heights by upside momentum surrounding the AI trade and rate-cut possibilities, but the notion that some stocks may have flown too close to the sun and that others won't see a meaningful return on huge AI investments anytime soon has triggered a wave of profit-taking activity.

In the process, the S&P 500 has dropped below key support at its 50-day moving average (6,669.00), creating a technical catalyst for some follow-through selling interest.

All seven of the "Magnificent 7" stocks are trading lower. Tesla (TSLA 426.24, -19.67, -4.41%) is the biggest loser, with news circulating that 75% of shareholders approved a pay package for Elon Musk that could possibly pay him as much as $1 trillion if a series of demanding benchmarks are reached.

NVIDIA (NVDA 182.58, -5.50, -2.92%) is next in line with a 2.9% loss on no news that has taken that stock below its 50-day moving average (183.31) as well. The S&P 500 information technology sector, which accounts for 35% of the S&P 500's market capitalization, is down 1.9%.

There is a lot of "weight," therefore, that is acting as a drag on the market, yet today's weakness isn't a broad market sell-off. There are five S&P 500 sectors trading higher, led by consumer staples (+1.4%) and energy (+1.1%). The equal-weighted S&P 500 is down just 0.1%, and breadth, while negative at the NYSE, favors decliners by a palatable 8-to-5 margin.

At the Nasdaq, which is populated with many growth stock listings, decliners lead advancers by a better than 2-to-1 margin. Take-Two (TTWO 228.36, -24.04, -9.52%), Microchip (MCHP 54.46, -4.88, -8.23%), The Trade Desk (TTD 42.54, -3.36, -7.32%), Arm Holdings plc (ARM 147.53, -10.72, -6.77%), and Marvell (MRVL 87.03, -6.30, -6.75%) are the biggest losers at the Nasdaq.

Aside from the complications the growth stocks are experiencing, the market is also grappling with some growth concerns tied to reports of flight cancellations due to the government shutdown and one of the lowest consumer sentiment readings on record.

The preliminary University of Michigan Consumer Sentiment reading for November fell to 50.3 (Briefing.com consensus: 54.0) from the final reading of 53.6 for October. In the same period a year ago, the index stood at 71.8.

The key takeaway from the report is that the decline in sentiment was widespread across the population, with one notable exception: consumers within the largest tercile of stock holdings.

Like yesterday, Treasuries have drawn some support from the struggles in the stock market and the slowdown concerns. The 2-yr note yield is down four basis points to 3.53%, and the 10-yr note yield is down three basis points to 4.07%.