Stock Market Update

[BRIEFING.COM] The stock market is facing selling pressure again after yesterday's rally. The S&P 500 (-1.8%) briefly dropped below its 200-day moving average (5,730) in recent trading. The Nasdaq Composite sports a 2.3% decline and the Dow Jones Industrial Average trades 1.2% lower.

Ongoing uncertainty about tariffs has driven some of the selling interest despite some mid-morning improvement in response to Commerce Secretary Lutnick telling CNBC that all USMCA compliant goods and services will be exempt from new tariffs for one month. 

The market is still worried about the tariffs being imposed after the one-month delay, as well as reciprocal tariffs starting April 2. 

Big declines in mega caps and semiconductor shares have an outsized impact on the rest of the equity market. NVIDIA (NVDA 111.51, -5.78, -4.9%), Tesla (TSLA 263.34, -15.70, -5.6%), Broadcom (AVGO 180.37, -11.71, -5.8%), and Amazon.com (AMZN 201.19, -7.14, -3.4%) are among the names experiencing increased selling. 

Some of the weakness in the semiconductor space is related to earnings news from Marvell Technology (MRVL 73.83, -16.28, -18.1%), which failed to meet high expectations with forward estimates. 

MongoDB (MDB 20086, -63.27, -24.0%) is another huge decliner after guidance didn't live up to expectations.

Retailers Macy's (M 13.23, -0.08, -0.6%) and Victoria's Secret (VSCO 21.02, -1.19, -5.4%) also reported earnings accompanied by cautious-sounding guidance. 

Reviewing today's economic data:

• January Trade Balance -$131.4 bln (Briefing.com consensus -$93.5 bln); Prior was revised to -$98.1 bln from -$98.4 bln
  • The key takeaway from the report is that efforts to get in front of expected tariff actions drove the huge increase in imports, which will be a drag on Q1 GDP forecasts.
• Weekly Initial Claims 221K (Briefing.com consensus 234k); Prior 242K, Weekly Continuing Claims 1.897 mln; Prior was revised to 1.855 mln from 1.862 mln
  • The key takeaway from the report is that the reduced level of initial claims -- a leading indicator -- will temper concerns for the time being about the labor market showing more pronounced signs of weakening.
• Q4 Productivity-Rev. 1.5% (Briefing.com consensus 1.2%); Prior 1.2%, Q4 Unit Labor Costs - Rev. 2.2% (Briefing.com consensus 3.0%); Prior 3.0%
  • The key takeaway from the report is that both components had the right skew for market sentiment in that productivity was higher than previously reported while unit labor costs (an inflation gauge) were lower than previously reported, aided by the improved productivity.
• January Wholesale Inventories 0.8% (Briefing.com consensus 0.7%); Prior was revised to -0.4% from -0.5%