Stock Market Update

[BRIEFING.COM] The stock market logged gains across the board. The S&P 500 jumped 1.1%, the Dow Jones Industrial Average registered a 1.1% gain, and the Nasdaq Composite rose 1.5%.

The session started a little slow, but buying increased in a noticeable way in the afternoon due to the following factors:

• White House Press Secretary Karoline Leavitt said President Trump will give a one month exemption for auto tariffs going through USMCA
• The Fed's Beige Book for February estimated that economic activity "rose slightly" since mid-January
• The S&P 500 remained above its 200-day moving average (5,728) at session lows 
• Short-covering activity and buy-the-dip trading following recent declines

Mega caps benefitted from the afternoon uptick in buying, providing an added boost to the major indices. The Vanguard Mega Cap Growth ETF (MGK), which traded down as much as 0.8% at its worst level today, closed with a 1.5% gain. 

NVIDIA (NVDA 117.30, +1.31, +1.1%) and Microsoft (MSFT 401.02, +12.41, +3.2%) were some of the top performers, contributing to the gain in the technology sector (+1.4%). 

Seven S&P 500 sector registered gains greater than 1.0% and only two sector closed lower today. Energy (-1.5%) was the biggest laggard, dropping with oil prices ($66.27/bbl, -2.03, -3.0%) in a reflection of lingering worries about growth that may impact demand.

The muted action right out of the gate in equities was influenced by mixed headlines. There was also some hopeful buzz that there could be some tariff relief for the counties, yet reports also indicated that the relief won't be in terms of lower tariff rates, but would involve USMCA modifications instead.

The stock market was also reacting to a large German fiscal plan aimed at improving infrastructure and increasing defense spending that is in contrast to efforts by the U.S. to cut government spending. There was a huge plunge in Germany's bunds in response and the 10-yr bund yield jumped 28 basis points to 2.79%.

US Treasuries also settled with losses, leading the 10-yr yield to settled six basis points higher at 4.27%.

• Dow Jones Industrial Average: +1.1% YTD
• S&P 500: -0.7% YTD
• S&P Midcap 400: -3.4% YTD
• Nasdaq Composite: -3.9%
• Russell 2000: -5.8% YTD

Reviewing today's economic data:

• Weekly MBA Mortgage Applications Index 20.4%; Prior -1.2%
• February ADP Employment Change 77K (Briefing.com consensus 145K); Prior was revised to 186K from 183K
• February S&P Global US Services PMI - Final 51.0; Prior 49.7
• February ISM Services 53.5% (Briefing.com consensus 53.0%); Prior 52.8%
  • The key takeaway from the report is that the pace of expansion in the nation's largest sector accelerated in February, taking a little edge off the market's growth concerns; however, the acceleration in activity was also accompanied by an acceleration in prices.
• January Factory Orders 1.7% (Briefing.com consensus 1.3%); Prior was revised to -0.6% from -0.9%
  • The key takeaway from the report is that it reflected not only a rebound in orders for nondefense aircraft and parts, but a nice pickup in business spending overall, evidenced by the 0.8% jump in new orders for nondefense capital goods excluding aircraft.

Thursday's economic lineup includes:

• 8:30 ET: January Trade Balance (Briefing.com consensus -$93.5 bln; prior -$98.4 bln), Revised Q4 Productivity (Briefing.com consensus 1.2%; prior 1.2%), Revised Q4 Unit Labor Costs (Briefing.com consensus 3.0%; prior 3.0%), weekly Initial Claims (Briefing.com consensus 234,000; prior 242,000), and Continuing Claims (prior 1.862 mln)
• 10:00 ET: January Wholesale Inventories (Briefing.com consensus 0.7%; prior -0.5%)
• 10:30 ET: Weekly natural gas inventories (prior -261 bcf)