Stock Market Update

[BRIEFING.COM] The rally that followed yesterday's FOMC news did not persist today. There was an attempt at follow through, but that attempt ultimately petered out along with the mega-cap stocks as investors remained pre-occupied with questions -- and no clear answers -- about the economic outlook.

There was some good economic news today, however. Existing home sales showed some surprising strength in February as buyers responded to an increase in inventory. It was a good sign along with no real change in weekly initial jobless claims, which continue to run at levels consistent with a solid labor market.

Those reports corroborated Fed Chair Powell's view from yesterday that the "hard data," as opposed to soft survey data, is still pretty solid in terms of what it is conveying about economic activity. That point notwithstanding, the specter of reciprocal tariffs being announced on April 2, and a bewildering forecast from the Fed that calls for lower growth and higher inflation in 2025 than previously expected, seemingly curtailed the market's interest in following through on yesterday's advance.

Today, overall, didn't feature much conviction on either side of the tape. There were four S&P 500 sectors that finished higher, none more than 0.4%, and seven S&P 500 sectors that finished lower, none more than 0.6%. The biggest gainers were the energy and utilities sectors, and the biggest loser was the materials sector.

The information technology sector, which is the market's most heavily-weighted sector, ended the day down 0.5%. It was a relative laggard throughout the session due in large part to weakness in Accenture (ACN 300.76-23.71, -7.3%) following its earnings report, weakness in Apple (AAPL 214.10, -1.14, -0.5%) as reports suggested the company has shaken up its AI leadership ranks, and weakness in the semiconductor stocks. The Philadelphia Semiconductor Index was down 0.7%. It would have been worse if not for the outperformance of NVIDIA (NVDA 118.53, +1.01, +0.9%).

The Treasury market for its part also saw some vacillation. Earlier, the 10-yr note yield dropped to 4.17% from yesterday's settlement level of 4.26%, but it crept back up to 4.25% before settling at 4.23%. Treasuries, like the other capital markets, digested a slate of central bank news on the other side of the FOMC decision that included the following:

• The People's Bank of China left its 1-yr and 5-yr loan prime rates unchanged
• The Swiss National Bank cut its policy rate by 25 bps to 0.25%
• Sweden's Riksbank left it policy rate unchanged at 2.25%
• Brazil raised its policy rate by 100 bps to 14.25%
• The Bank of England left its policy rate unchanged at 4.50%
• ECB President Lagarde suggested the 25% tariff on imports imposed by the U.S. could subtract approximately 0.3 percentage points from euro area growth in the first year.

Reviewing today's economic data:

• Initial jobless claims for the week ending March 15 increased by 2,000 to 223,000 (Briefing.com consensus 220,000). Continuing jobless claims for the week ending March 8 increased by 33,000 to 1.892 million.
  • The key takeaway from the report is that this period covers the week in which the survey for the employment report is conducted, so the low level of initial jobless claims will lead economists to project another relatively solid increase in nonfarm payrolls.
• The Q4 Current Account balance showed a narrowing in the deficit to $303.9 billion (Briefing.com consensus -$334.0 billion) from an upwardly revised $310.3 billion (from -$310.9 billion).
• The March Philadelphia Fed Index dipped to 12.5 (Briefing.com consensus 10.0) from 18.1 in February. The dividing line between expansion and contraction is 0.0, so this report indicates that business activity in the Philadelphia fed region expanded in March, but at a slower pace than the prior month.
• Existing home sales increased 4.2% month-over-month in February to a seasonally adjusted annual rate of 4.26 million (Briefing.com consensus 3.95 million) from an upwardly revised 4.09 million (from 4.08 million) in January. Sales were down 1.2% from the same period a year ago.
  • The key takeaway from the report is that existing home sales actually increased, as the consensus estimate called for a 3.2% month-over-month decline. The surprising strength suggests some unleashing of pent-up demand with more inventory on the market and prospective buyers adjusting to the higher level of mortgage rates.
• February Leading Indicators declined 0.3% (Briefing.com consensus -0.2%) following an upwardly revised 0.2% decline (from -0.3%) in January.

There is no U.S. economic data of note on Friday.