Stock Market Update

[BRIEFING.COM] The stock market returned to its downtrend after a brief reprieve. The market-cap weighted S&P 500 trades 1.1% lower and the equal-weighted S&P 500 trades 0.4% lower.

Increased geopolitical tensions have contributed to the downside bias after reports of an Israeli airstrike on Gaza. The market is also waiting for any market-moving news related to President Trump and President Putin call today to discuss ending the war in Ukraine.

Market participants are digesting some economic releases, but reactions in the equity market are muted. Housing starts and building permits reflected a boost in starts activity related to better weather conditions. The import and export prices reflected an inflationary shift in the year-over-year readings.

Also, total industrial production increased 0.7% month-over-month in January (Briefing.com consensus 0.2%) following a downwardly revised 0.3% increase (from 0.5%) in January. The capacity utilization rate jumped to 78.2% (Briefing.com consensus 77.7%) from a downwardly revised 77.7% (from 77.8%) in January. Total industrial production increased 1.4% yr/yr while the capacity utilization rate was 1.4 percentage points below its long-run average.

The key takeaway from the report is that there was a solid increase in manufacturing output that was led by an 8.5% jump in the index for motor vehicles and parts, which likely had some tariff frontrunning involved. Motor vehicle assemblies increased 11.5% month-over-month to a seasonally adjusted annual rate of 10.35 million.

Treasuries exhibited some volatility following the reports, but yields now sit little changed from levels seen in front of the data. The 10-yr yield is at 4.30% and the 2-yr yield is at 4.03%.