Stock Market Update

[BRIEFING.COM] The stock market experienced a robust rally, rebounding from recent declines. The S&P 500 surged 2.1%, the Dow Jones Industrial Average climbed 674 points (1.7%), and the Nasdaq Composite advanced 2.6%.

The favorable price action derived largely from a buy-the-dip mentality after solid losses of late. Catalysts that drew in buying interest included: 

• Diminishing chances of a government shutdown citing as a catalyst for buying after Senator Chuck Schumer said he would vote to keep the government funded
• Easing trade tensions between the US and Canada following reports of a productive meeting between Ontario Premier Ford and Secretary of Commerce Lutnick
• Speculation that China will soon provide more policy stimulus to boost domestic consumption
• The S&P 500 closing in correction territory yesterday (i.e. 10% decline from its all-time high on February 19)

Gains in the mega cap space provided integral support to index performance. NVIDIA (NVDA 121.67, +6.09, +5.3%) and Tesla (TSLA 249.98, +9.30, +3.9%) were big standouts in the space.

Even Ulta Beauty (ULTA 357.48, +43.01, +13.7%) and DocuSign (DOCU 85.76, +11.06, +14.8%), which reported disappointing guidance traded sharply higher in today's broad advance. ULTA talked about consumer uncertainty and issued disappointing full-year guidance and DOCU issued Q1 and full-year revenue guidance below consensus estimates.

The market largely overlooked a soft economic report this morning. The preliminary University of Michigan Index of Consumer Sentiment survey for March dropped to 57.9 (Briefing.com consensus 65.6) from the final reading of 64.7 for February, marking the third straight drop in sentiment. In the same period a year ago, the index stood at 79.4.

There was still some uneasiness in play, though, as gold prices prices settled above $3,001.00/oz, reflecting ongoing safe-haven trading. 

Elsewhere, the 10-yr yield settled three basis points higher at 4.31% and the 2-yr yield settled seven basis points higher at 4.02%.

• Dow Jones Industrial Average: -2.5% YTD
• S&P 500: -4.1% YTD
• S&P Midcap 400: -6.2% YTD
• Nasdaq Composite: -8.1%
• Russell 2000: -8.3% YTD

Reviewing today's economic data:

• March Univ. of Michigan Consumer Sentiment - Prelim 57.9 (Briefing.com consensus 65.6); Prior 64.7
  • The key takeaway from the report is that the weakening in sentiment cut across groups by age, income, wealth, political affiliations, and geographic regions, with inflation concerns and policy uncertainty jumping out as key factors for the drop in sentiment.

Looking ahead to Monday, market participants receive the following data: March Empire State Manufacturing (prior 5.7), February Retail Sales (prior -0.9%), and Retail Sales ex-auto (prior -0.4%) at 8:30 ET; and January Business Inventories (prior -0.2%) and March NAHB Housing Market Index (prior 42) at 10:00 ET