Stock Market Update

[BRIEFING.COM] The major averages are mixed at midday with the S&P 500 (+0.3%) and Nasdaq (+0.5%) holding gains while the Dow (-0.1%) lags.

The first half of the Thursday session has proven messy even though last night's quarterly report from NVIDIA (NVDA 140.30, +5.49, +4.1%) was better than expected, especially when accounting for the challenge that the chip behemoth is facing in navigating the tariff/regulatory landscape.

NVIDIA's results have given a boost to the top-weighted technology sector (+0.7%), though there has been some offsetting influence from a poor reaction to above-consensus results from Salesforce (CRM 260.35, -15.68, -5.7%) and reduced guidance from HP (HPQ 24.94, -2.26, -8.3%).

Chipmakers have also had to contend with news that the Trump administration is telling chip software design companies to stop selling services to customers in China.

The market received another catalyst last evening when it was reported that the Court of International Trade blocked President Trump's tariffs and ordered a dismantling of the enforcement mechanism in ten days. However, the impact of this development has faded when it became clear that President Trump will not only appeal the ruling, but also look for other ways to keep the tariffs in place.

Besides technology, four other sectors hold midday gains with lightly-weighted real estate (+0.5%) and utilities (+0.4%) trading just ahead of health care (+0.4%) and the consumer discretionary sector (+0.4%).

The tariff challenge has not produced notable standouts in the discretionary sector. The biggest outlier in that group is electronics retailer Best Buy (BBY 65.52, -6.00, -8.4%), as the company's Q1 beat is being overshadowed by reduced guidance for FY26 due in part to a headwind from tariffs.

Treasuries started the day in the red before embarking on a bounce that has continued into the early afternoon, bringing the 10-yr yield down by five basis points to 4.43%. The bounce has been supported by some disappointment on the economic front after a larger-than-expected rise in jobless claims and a sharp drop in pending home sales masked a slight upward revision to Q1 GDP.

Taking a closer look at today's data:

• Initial jobless claims for the week ending May 24 increased by 16,000 to 240,000 (Briefing.com consensus 230,000), while continuing jobless claims for the week ending May 17 increased by 26,000 to 1.919 million, hitting their highest level since November 13, 2021.
  • The key takeaway from the report was the tandem jump in initial and continuing jobless claims, which denotes some increased layoff activity and some increased difficulty in finding a new job after being laid off.
• The second estimate for the Q1 GDP report showed a 0.2% decline in real GDP (Briefing.com consensus -0.3%) versus the 0.3% decline reported in the advance estimate. The GDP Price Deflator was unrevised at 3.7% (Briefing.com consensus 3.7%) following a 2.3% increase in Q4.
  • The key takeaway from the report is that it featured a downward revision to personal spending to 1.2% from 1.8% in the advance estimate, underscoring how the tariff uncertainty and inflation angst tempered consumer spending activity. 
• Pending Home Sales were down 6.3% in April (Briefing.com consensus -1.1%) after rising a revised 5.5% (from 6.1%) in March.