Stock Market Update

[BRIEFING.COM] The S&P 500 (+0.4%), Nasdaq Composite (+0.2%), and DJIA (+0.8%) are charting session highs as mega-cap and tech names continue to improve from earlier losses while the broader market trades higher. 

A sharp downturn in Microsoft (MSFT 483.10, -6.90, -1.41%) just before the open precipitated the lower start in the information technology sector (-0.3%) after The Information reported that the company is lowering software sales quotas. A spokesperson from the company reached out to CNBC to refute the claim, highlighting that "Aggregate sales quotas have not been lowered." While the stock has reclaimed some of its early loss, it remains firmly lower. 

Despite a loss in NVIDIA (NVDA 180.81, -0.65, -0.36%), chipmakers are performing relatively well today, lifting the PHLX Semiconductor Index (+0.6%) to a solid gain. Microchip (MCHP 61.83, +5.12, +9.03%) is the best performer in the sector, rallying past its 200-day (60.28) and 50-day (60.36) moving averages after raising its guidance for Q3.

Elsewhere, the utilities sector (-0.6%) continues to underperform this week, currently sitting with a 3.6% week-to-date loss, and the real estate sector (-0.1%) faces pressure from a sharp loss in Alexandria RE (ARE 49.98, -3.86, -7.16%) after the company announced it is lowering its quarterly dividend payment by 45%. 

Meanwhile, eight S&P 500 sectors hold gains as the broader market benefits from solid participation, with advancers outpacing decliners by a greater than 2-to-1 ratio on both the NYSE and the Nasdaq. 

The energy sector (+1.9%) leads the way, supported by a $0.69 (+1.2%) increase in the price of oil to $59.33 per barrel. 

The financials sector (+1.2%) also holds a nice gain as the majority of its components trade higher. Coinbase Global (COIN 275.69, +12.43, +4.72%) and Robinhood Markets (HOOD 132.92, +6.98, +5.54%) are at the top of the sector's leaderboard as Bitcoin continues to recover from Monday's slide, hovering near the $93,000 mark. 

The consumer discretionary sector (+0.7%) rounds out the top three S&P 500 sectors. Tesla (TSLA 441.42, +12.18, +2.84%) has rebounded nicely from a slightly lower finish yesterday, while elevated expectations for a December rate cut contribute to a 2.3% gain in the iShares U.S. Home Construction ETF. 

Though not S&P 500 components, American Eagle (AEO 24.08, +3.25, +15.60%) and Macy's (M 23.12, +0.42, +1.83%) delivered solid earnings reports, adding to positive sentiment across retailer names today that has the SPDR S&P 500 Retail ETF up 2.0%. 

Dollar Tree (DLTR 112.50, +3.51, +3.22%) is also a component of the retail ETF, with a nice gain following an earnings beat of its own helping to keep the consumer staples sector (+0.2%) in positive territory. 

In addition to this morning's earnings reports, the market received a full batch of economic data. A surprise dip in the November ADP Employment Change Report (-32K; Briefing.com consensus: 20K) crossed the wires around the same time equity futures saw a reversal into negative territory. This prompted some questions around the growth outlook, though it is worth noting that the Microsoft headline hit around the same time. 

While the weak jobs data is seemingly bad for the growth outlook, the market remains fixated on the potential of a rate cut to keep the economy on a growth trajectory. This point resonates in the fact that cyclical sectors and small-cap names are trading higher today (the Russell 2000 is up 1.4%). 

Reviewing today's data:

• Weekly MBA Mortgage Applications Index -1.4%; Prior 0.2%
• November ADP Employment Change -32K (Briefing.com consensus 20K); Prior was revised to 47K from 42K
• September Import Prices 0.0%; Prior was revised to 0.1% from 0.3%
• September Import Prices ex-oil 0.2%; Prior was revised to 0.1% from 0.4%
• September Export Prices 0.0%; Prior was revised to 0.1% from 0.3%
• September Export Prices ex-ag. 0.0%; Prior was revised to 0.1% from 0.3%
• September Industrial Production 0.1% (Briefing.com consensus 0.1%); Prior was revised to -0.3% from 0.1%; September Capacity Utilization 75.9% (Briefing.com consensus 77.3%); Prior was revised to 75.9% from 77.4%
  • The key takeaway from the report is the downshift in the capacity utilization rate, which implies there is slack in the industrial sector that should translate into reduced inflation pressure.
• November S&P Global U.S. Services PMI - Final 54.1; Prior 54.8
• November ISM Services 52.6% (Briefing.com consensus 52.4%); Prior 52.4%
  • The key takeaway from the report is that activity in the services sector remains in expansion mode, yet that expansion is somewhat tepid, evidenced by this low November reading that is 10 percentage points less than the 12-month average since February 2022, when it stood at 62.6%.