Stock Market Update

[BRIEFING.COM] Stocks struggled under selling activity, leading the major indices to close sharply lower. The S&P 500 dropped 2.2%, the Nasdaq Composite fell 3.1%, and the Dow Jones Industrial Average declined 1.7%.

There was a negative bias through the entire session following NVIDIA's (NVDA 104.49, -7.71, -6.9%) announcement that it expects Q1 results to include up to $5.5 billion of charges associated with H20 products due to export restrictions for China. AMD (AMD 88.29, -7.00, -7.4%) also announced an expected impact of $800 million.

Selling increased noticeably in the afternoon following remarks from Fed Chair Powell, who appeared at an event in Chicago, indicating that he doesn't think the Fed will make progress on its dual mandate goals this year and that there isn't a "Fed put."

This morning's economic data also contributed to the downside bias despite solid headline numbers in the retail sales report. Total retail sales increased 1.4% month-over-month in March (Briefing.com consensus 1.3%) following an unrevised 0.2% increase in February. Excluding autos, retail sales rose 0.5% month-over-month (Briefing.com consensus 0.2%) following an upwardly revised 0.7% increase (from 0.3%) in February.

The negative takeaway related to the belief that last month's data may have been inflated by buying activity ahead of the tariff impacts and may decrease in the future. 

Mega caps and semiconductor shares led the downside charge amid ongoing uncertainty on the tariff front and related to growth concerns. The Vanguard Mega Cap Growth ETF (MGK) dropped 3.3% and PHLX Semiconductor Index (SOX) fell 4.1%.

The technology sector registered the largest decline by a decent margin, falling 3.9%. The next worst performing sector was consumer discretionary (-2.7%) and communication services (-2.5%).

• Dow Jones Industrial Average: -6.8% YTD
• S&P 500: -10.3% YTD
• S&P Midcap 400: -12.8% YTD
• Nasdaq Composite: -15.6% YTD
• Russell 2000: -16.4% YTD

Reviewing today's economic data:

• Weekly MBA Mortgage Applications Index -8.5%; Prior 20.0%
• March Retail Sales 1.4% (Briefing.com consensus 1.3%); Prior 0.2%, March Retail Sales ex-auto 0.5% (Briefing.com consensus 0.2%); Prior was revised to 0.7% from 0.3%
  • The complicated element -- and key takeaway from the report -- is that the strength has a lot to do ostensibly with getting ahead of the tariff actions, which is to say the strength may not be sustained. If there is a counterargument to that point, it is that sales at food services and drinking places were up a robust 1.8% in March after declining 0.8% in February.
• March Industrial Production -0.3% (Briefing.com consensus -0.3%); Prior was revised to 0.8% from 0.7%, March Capacity Utilization 77.8% (Briefing.com consensus 77.9%); Prior 78.2%
  • The key takeaway from the report is that the large decline in the output of utilities overshadowed the increase in manufacturing output and mining output, so the headline decline isn't as bad as it looks at first blush.
• February Business Inventories 0.2% (Briefing.com consensus 0.3%); Prior 0.3%
• April NAHB Housing Market Index 40 (Briefing.com consensus 39); Prior 39

Thursday's economic calendar includes:

• 8:30 ET: March Housing Starts (Briefing.com consensus 1.418 mln; prior 1.501 mln), Building Permits (Briefing.com consensus 1.455 mln; prior 1.456 mln), weekly Initial Claims (Briefing.com consensus 225,000; prior 223,000), Continuing Claims (prior 1.850 mln), and April Philadelphia Fed Survey (Briefing.com consensus 10.0; prior 12.5)
• 10:30 ET: Weekly natural gas inventories (prior +57 bcf)