Stock Market Update

[BRIEFING.COM] The S&P 500 (flat), Nasdaq Composite (-0.6%), and DJIA (+1.3%) sit mixed near session highs as considerable weakness in mega-cap and tech names limits growth despite solid gains across the broader market. 

The FOMC's delivery of a rate cut at yesterday's meeting, along with upwardly revised economic growth projections and generally more dovish than expected commentary, painted a supportive backdrop for stocks that pushed the major averages close to their record highs yesterday afternoon. 

Oracle (ORCL 195.40, -27.61, -12.38%) has somewhat crashed that party after a disappointing earnings report that featured a miss on revenues and free cash flow that came in below expectations. The stock has slipped below its 200-day moving average (212.78) and ignited a fresh wave of valuation concerns across the AI trade, sending a number of mega-cap stocks lower. 

NVIDIA (NVDA 179.07, -4.71, -2.57%) is a notable laggard, contributing to the information technology sector's 1.1% loss, which is roughly half that of its worst levels of the session. 

The PHLX Semiconductor Index (-1.7%) is also off of its session lows, though less improved than the broader technology sector. Chipmakers and the broader AI trade will face another test after the close today as Broadcom (AVGO 404.13, -8.84, -2.14%) is set to report its earnings. 

Elsewhere, only the communication services sector (-0.6%) remains firmly below its baseline, with its loss also a product of mega-cap weakness. Alphabet (GOOG 316.40, -4.60, -1.43%) trades lower, contributing to a 0.5% loss in the Vanguard Mega Cap Growth ETF. 

The sector also houses a standout Dow Component, Walt Disney (DIS 110.26, +1.43, +1.31%), which trades higher after announcing a licensing deal and $1 billion investment in OpenAI. The DJIA has notched a record high in the first half of today's action, supported by a range of solid individual performances. 

Visa (V 341.76, +16.03, +4.92%) is the top mover in a climbing financials sector (+1.6%) after Bank of America Securities upgraded the stock to Buy from Neutral. 

Cyclical sectors continue to outperform after positive developments from yesterday's FOMC meeting provided a nice spark. Additionally, some rotation out of tech names contributes to strength in both cyclical and defensive sectors. 

The materials sector (+2.1%) holds the widest gain across the eight S&P 500 sectors in positive territory, with Mosaic (MOS 25.65, +1.90, +8.00%) the top-performing S&P 500 name.

Meanwhile, the health care sector (+1.1%) is a standout across the defensive sectors. Managed care names such as Centene (CNC 41.13, +2.46, +6.36%) and Molina Healthcare (MOH 169.51, +8.99, +5.60%) are outperforming amid news that a Republican-backed healthcare plan to redirect Affordable Care Act subsidies from insurance companies to Americans has failed by a Senate vote of 51-48. 

Eli Lilly (LLY 1020.61, +26.97, +2.71%) also holds a solid gain after announcing positive topline results from its Phase 3 TRIUMPH-4 clinical trial evaluating retatrutide, its investigational "triple G" agonist.

Outside of the S&P 500, the Russell 2000 (+1.1%) and S&P Mid Cap 400 (+0.9%) continue their stretch of outperformance over the past two weeks as smaller-cap stocks react positively to the promise of friendlier monetary policy conditions.

Reviewing today's data:

• Weekly Initial Claims 236K; Prior was revised to 192K from 191K, Weekly Continuing Claims 1.838 mln; Prior was revised to 1.937 mln from 1.939 mln
  • The key takeaway from the report is that, on balance, it doesn't point to a material weakening in the labor market.
• September Trade Balance -$52.8 bln (Briefing.com consensus -$61.7 bln); Prior was revised to -$59.3 bln from -$59.6 bln
  • The key takeaway from the report is that the narrower deficit was the byproduct of exports being $8.4 billion more than August exports and imports being $1.9 billion more than August imports.
• September Wholesale Inventories 0.5% (Briefing.com consensus -0.2%); Prior -0.1%