Stock Market Update

[BRIEFING.COM] The S&P 500 (-0.5%), Nasdaq Composite (-0.3%), and DJIA (-0.7%) trade lower as the stock market faces a broad retreat today. Unlike recent sessions, the weakness is not concentrated in the AI trade, with today's action instead reflecting a broader-market pullback after relatively solid participation yesterday. 

The lack of rotational strength seats the Russell 2000 (-0.6%) and S&P Mid Cap 400 (-0.7%) with losses similar to that of their larger-cap counterparts.

The energy sector (-2.8%) sits at the bottom of the leaderboard for a second consecutive day, facing pressure as the price of oil falls $1.39 (-2.5%) to $55.43 per barrel. This puts oil on track for its lowest pit close since early 2021 amid growing hopes for a Russia-Ukraine peace deal that will be acceptable to both sides, which would likely set the path for Russia's return to the global oil market.

Falling oil prices support airline stocks such as United Airlines (UAL 110.65, +2.95, +2.74%) and Southwest Air (LUV 42.57, +0.85, +2.04%), though the industrials sector (-0.7%), like every other sector, remains lower. 

The health care sector (-1.6%) is another notable laggard, facing some amplified profit-taking after closing 1.3% higher yesterday. Pfizer (PFE 25.23, -1.20, -4.55%) is one of the worst-performing S&P 500 names today after issuing FY26 guidance that included EPS estimates that fell short of analyst expectations. 

Additionally, health care insurance providers such as Humana (HUM 260.56, -14.18, -5.16%), Centene (CNC 38.68, -1.77, -4.38%), and Molina Healthcare (MOH 161.76, -4.74, -2.84%) give back a chunk of recent strength. Politico reported that bipartisan senators are negotiating a limited two-year extension of Obamacare that would include cost-sharing reductions and greater flexibility for health savings accounts, with a vote hoped for as early as next week.

Meanwhile, the information technology (-0.3%) and consumer discretionary (-0.2%) sectors have largely spent the session oscillating around their flatlines, allowing the Nasdaq Composite to briefly reclaim its own unchanged level several times. Mixed performances across the market's largest names have the Vanguard Mega Cap Growth ETF down a modest 0.2%. 

Still, without strong support from the mega-caps, the major indices move lower against a backdrop of weakness that seats all eleven S&P 500 sectors with a loss. 

Though this morning's slate of economic data was widely anticipated, it had little effect on futures or the market's near-term expectations for monetary policy easing. 

The November Employment Situation report showed a much bigger-than-expected increase in Nonfarm Payrolls (64,000; Briefing.com consensus 30,000), though it also showed a 105,000 drop in October payrolls. 

The market also received the Retail Sales report for October (0.0%; Briefing.com consensus 0.3%), which missed estimates, but Retail Sales ex-auto (0.4%; Briefing.com consensus 0.3%) beat estimates.

Reviewing today's data:

• November Nonfarm Payrolls 64K (Briefing.com consensus 30K); Prior -105K,November Nonfarm Private Payrolls 69K (Briefing.com consensus 34K); Prior 52K, November Unemployment Rate 4.6% (Briefing.com consensus 4.4%); Prior 4.4%, November Avg. Hourly Earnings 0.1% (Briefing.com consensus 0.3%); Prior 0.4%, November Average Workweek 34.3 (Briefing.com consensus 34.3); Prior 34.2
  • The key takeaway from the employment report will be the bump in the official unemployment rate and the softening in the U-6 unemployment rate. Both have helped substantiate the Fed's concerns about downside risk to employment that served as the basis for the December cut.
• October Retail Sales 0.0% (Briefing.com consensus 0.3%); Prior was revised to 0.1% from 0.2%, October Retail Sales ex-auto 0.4% (Briefing.com consensus 0.3%); Prior was revised to 0.1% from 0.3%
  • The key takeaway from the report is that there were solid increases in spending across many discretionary spending categories. The notable exceptions were building material and garden equipment and supplies dealers sales (-0.9%) and food services and drinking places (-0.4%). Department store sales (+4.9%), on the other hand, had a big month along with furniture and home furnishings (+2.3%), sporting goods (+1.9%) and nonstore retailers (+1.8%).
• September Housing Starts DELAYED (Briefing.com consensus 1.320 mln); Prior 1.307 mln, September Building Permits DELAYED (Briefing.com consensus 1.348 mln); Prior 1.312 mln
  • The key takeaway from the report is the weakness in single-unit starts (-7.0% month-over-month) and single-unit permits (-2.2%), which is a reflection of affordability constraints for builders and prospective homeowners alike. Strikingly, single-unit starts in the South—the nation's largest homebuilding region—plunged 17.0% in August.
• December S&P Global U.S. Manufacturing PMI - Prelim 51.8; Prior 52.2
• December S&P Global U.S. Services PMI - Prelim 52.9; Prior 54.1
• September Business Inventories 0.2% (Briefing.com consensus 0.1%); Prior 0.0%