Stock Market Update

[BRIEFING.COM] The stock market has exhibited choppy action at the index level. The Dow Jones Industrial Average trades more than 100 points lower while the S&P 500 (+0.3%) and Nasdaq Composite (+0.3%) trade up.

There's has been some inclination to continue buying on weakness after last week's losses, but mixed responses to earnings news and volatility in the Treasury market have limited buyer conviction. The 10-yr yield was at 4.42% earlier, jumped to 4.46% a short time ago, and sits at 4.45% now. It's still noticeably lower than its high this week at 4.59%.

Outsized moves in either direction are mostly limited to individual names with specific catalysts. Qualcomm (QCOM 168.37, -7.49, -4.3%) is a standout in that respect, leading other semiconductor shares to trade lower after reporting quarterly results. The PHLX Semiconductor Index (SOX) shows a 0.3% decline.

Shares of Ford Motor (F 9.34, -0.67, -6.7%) and Skyworks Solutions (SWKS 66.50, -20.57, -23.6%) each hit 52-week lows in response to earnings.

Meanwhile, Tapestry (TPR 82.17, +8.79, +11.9%), which hit a 52-week high, and Hershey (HSY 152.90, +6.98, +4.8%) are among the big earnings-related winners. 

Rate cut expectations are little changed following this morning's data, which showed that productivity is on the rise and should help temper inflation pressures and the job market remains solid with a low level of weekly jobless claims.

The fed funds futures market sees a 63.8% probability of a rate cut by the June FOMC meeting versus a 65.9% probability yesterday, according to the CME FedWatch Tool.

Reviewing today's economic data:

• Q4 Productivity-Prel 1.2% (Briefing.com consensus 0.8%); Prior was revised to 2.3% from 2.2%, Q4 Unit Labor Costs-Prel 3.0% (Briefing.com consensus 2.6%); Prior was revised to 0.5% from 0.8%
  • The key takeaway from the report is that the productivity is on the rise, which will help temper inflation pressures. The 1.8% annualized rate of productivity growth in the current business cycle (starting Q4 2019) is higher than the 1.5% rate of the previous business cycle (Q4 2007 through Q4 2019).
• Weekly Initial Claims 219K (Briefing.com consensus 213K); Prior was revised to 208K from 207K, Weekly Continuing Claims 1.886 mln; Prior was revised to 1.850 mln from 1.858 mln
  • The key takeaway from the report is that there simply hasn't been a material increase in initial jobless claims, which would suggest there is some real weakening in the labor market. Hiring activity might have slowed, but the layoff activity does not impart an indication that employers think the economy is on the brink of a meaningful slowdown.