Stock Market Update

[BRIEFING.COM] The equity market has had some good moments today; unfortunately, most of them were before the open. Stock indications were much better then, including for NVIDIA (NVDA 126.90, -4.35, -3.3%), which had been up 2.9% in pre-market trading following last night's earnings report and outlook.

Those good moments didn't last long. They got spoiled in part by President Trump's announcement shortly before today's open that the tariffs for Canada and Mexico will commence March 4 and that an additional 10% tariff for China will be applied starting March 4 as well.

This news took some steam out of the futures trade as the opening bell approached, but NVIDIA rolling over almost immediately after today's start steamrolled the market-cap weighted indices.

Some spotty economic data, which featured a notable jump in weekly initial jobless claims and an upward revision to the PCE and core-PCE Price Indexes in the second estimate for Q4 GDP, also tempered investor enthusiasm.

That point notwithstanding, the financial (+1.3%) and energy (+1.2%) sectors have provided some pockets of strength that have kept the market from getting tripped up entirely by the weakness in NVIDIA and other mega-cap stocks like Tesla (TSLA 289.48, -1.32, -0.4%), Alphabet (GOOG 172.59, -2.11, -1.2%), Amazon.com (AMZN 213.21, -1.14, -0.5%), and Microsoft (MSFT 397.15, -2.58, -0.6%).

Accordingly, the market cap-weighted S&P 500 isn't feeling the full brunt of their weakness, as there has been some rotational action within the stock market.

Value, as a class, is outperforming growth, evidenced by the 0.4% increase in the Russell 3000 Value Index and the 0.7% decline in the Russell 3000 Growth Index.

Elsewhere, Treasuries have given back a small portion of their recent gains. The 2-yr note yield is up three basis points to 4.10% and the 10-yr note yield is up five basis points to 4.30%. These moves haven't had any undue influence on the behavior of the stock market today, which has vacillated in conjunction with the behavior of the mega-cap cohort. The Vanguard Mega-Cap Growth ETF has been up as much as 0.9%, down as much as 1.3%, and is currently down 0.7%.

Reviewing today's economic data:

• Initial jobless claims for the week ending February 22 increased by 22,000 to 242,000 (Briefing.com consensus 220,000). Continuing jobless claims for the week ending February 15 were 1867K (prior revised to 1867K from 1869K)
  • The key takeaway from the report is that initial jobless claims reached their highest level since early December, which will add to the market's festering concerns about a slowdown in growth.
• The second estimate for Q4 GDP was 2.3% (Briefing.com consensus 2.3%; prior 2.3%) while the second estimate for the Q4 GDP Deflator was 2.4% (Briefing.com consensus 2.2%; prior 2.2%).
  • The key takeaway from the report is that the growth was driven largely by consumer spending and government spending, but with targeted efforts by the Trump administration to cut government spending and to implement tariffs, there will be concerns about GDP growth decelerating in coming quarters due to less of a contribution from consumer spending and government spending.
• January Durable Goods Orders were up 3.1% (Briefing.com consensus 1.8%; prior revised to -1.8% from -2.2%). Excluding transportation, durable goods orders were flat (Briefing.com consensus 0.4%; prior revised to 0.1% from 0.3%).
  • The key takeaway from the report is that nondefense capital goods orders, excluding aircraft -- a proxy for business spending -- logged a healthy 0.8% increase in January, offsetting the headline disappointment of an unchanged reading for durable goods orders, excluding transportation.
• January Pending Home Sales declined 4.6% (Briefing.com consensus -0.8%) following an upwardly revised 4.1% decline (from -5.5%) in December.
  • The key takeaway from the report is that pending home sales hit their lowest level on record going back to 2001.