Stock Market Update

[BRIEFING.COM] NVIDIA (NVDA 131.87, +5.24, +4.1%), which reports its quarterly results after the close, is trading today as if it has already reported and shared good news. Its stock is up big in front of the report and is acting as an influential support factor for the market cap-weighted indices.

The move in NVIDIA today, however, comes after the stock dropped 9.1% over the previous four sessions. Its rebound coincides with some sharp gains in other previously high-flying momentum trades that have been hit hard of late.

Axon Enterprise (AXON 582.55, +85.90, +17.3%), which reported better than expected quarterly results, is one of them; Super Micro Computer (SMCI 53.51, +7.97, +17.5%), which filed some needed 10-K and 10-Q reports to avoid Nasdaq delisting, is another; and Palantir Technologies (PLTR 90.67, +2.83, +3.2%), which doesn't have any news of note, is also on the move.

The moves by these stocks, and others, connotes a disassociation with the defensive-minded shift that has persisted over the last four or five trading sessions. The same can be said for the underperformance today of the consumer staples (-1.7%) and health care (-0.9%) sectors, and the pullback in the CBOE Volatility Index (18.63, -0.80, -4.1%).

Conversely, today's rebound effort has been led by the mega-cap stocks, the small-cap stocks, and the semiconductor stocks, all of which have been hit hard of late. The Philadelphia Semiconductor Index is up 2.2%, bolstered by NVIDIA's performance, which in turn is helping to boost the S&P 500 information technology sector (+1.3%) to the top of today's leaderboard.

Market sentiment got a boost early from the news that the House passed a resolution (271-215) last night for one, large reconciliation bill that calls for $4.5 trillion in tax cuts and $2 trillion in spending cuts over the next decade. That resolution has been passed to the Senate. If approved there, the House and the Senate will start drafting actual legislation that will be voted on in coming months.

The early boost helped drive the S&P 500 back above its 50-day moving average (6,005), but buyer conviction soon faded there. Currently, that key short-term technical has pivoted back to resistance from support with some increased selling interest in the early afternoon trade.

The 2-yr note yield is up one basis point to 4.11% and the 10-yr note yield is down two basis points to 4.28%. Growth slowdown concerns were piqued again with a disappointing 10.5% month-over-month decline in January new home sales.

Reviewing today's economic data:

• New home sales decreased 10.5% month-over-month in January to a seasonally adjusted annual rate of 657,000 units (Briefing.com consensus 681,000) from an upwardly revised 734,000 (from 698,000) in December. On a year-over-year basis, new home sales were down 1.1%.
  • The key takeaway from the report is that new home sales in January felt the brunt of affordability constraints that were tightened by elevated mortgage rates and higher prices.
• MBA Mortgage Applications Index -1.2% week-over-week (prior -6.6%) with refinance applications down 4% and purchase applications flat