Stock Market Update

[BRIEFING.COM] The DJIA (+0.1%) and S&P 500 (-0.3%) notched record highs today despite relative weakness across the stock market, which saw the major averages finish mixed for the day.

At its peak, the DJIA set a new all-time high of 45,203.52, though its modest gain was not enough to carry it to a record closing high. The S&P 500 captured a new record high of 6,481.34 today during a brief early stint in positive territory.

The DJIA's advance was underpinned by a strong rally in UnitedHealth (UNH 304.16, +32.67, +12.03%), which traded higher after it was reported that Berkshire Hathaway (BRK.B 477.20, -1.86, -0.4%) purchased over 5 million shares in UNH last quarter, worth around $1.6 billion.

The move helped a hot health care sector (+1.7%) finish as both the top-performing S&P 500 sector today and this week, with a week-to-date gain of 4.6%.

The communication services sector (+0.5%) also captured a nice gain due to strong leadership in Alphabet (GOOG 204.91, +1.09, +0.53%) and Meta Platforms (META 785.23, +3.10, +0.40%) amid an otherwise lackluster day for mega-cap names. 

Elsewhere, the real estate (+0.7%) and consumer staples (+0.1%) sectors round out the four S&P 500 sectors that finished in positive territory, with the materials sector finishing flat. 

The information technology sector (-0.8%) faced pressure out of the gate today, with its losses keeping the S&P 500 and Nasdaq Composite (-0.4%) under their flatlines for the majority of the session.

The sector saw weakness in its chipmaker names following disappointing guidance from Applied Materials (AMAT 161.76, -26.48, -14.07%), despite a beat on EPS and revenues. 

NVIDIA (NVDA 180.44, -1.58, -0.87%), among others, contributed to a 2.2% loss in the PHLX Semiconductor Index.

Weakness in large tech names saw the Vanguard Mega Cap Growth ETF finish with a loss of 0.4%, though the Russell 2000 (-0.6%) and S&P Mid Cap 400 (-0.6%) faced similar retreats. 

Though today's slide was modest, it was relatively broad-based. Decliners outpaced advancers by a nearly 3-to-2 margin on the NYSE Nasdaq, and six S&P 500 sectors finished with a loss.

Lingering inflation concerns have slightly eroded expectations for a 25 basis point rate cut at the September FOMC meeting, with the CME FedWatch tool now assigning an 84.9% probability, down from 92.1% the day before. While the drop is modest, it also dampens the odds of additional cuts later in the year.

Today's release of the July Import and Export Price Indexes sent some mixed signals, as the 0.4% increase in import prices clouds the inflation outlook in the sense that it is keeping the market guessing as to whether tariff inflation is going to ramp up in coming months or if this is just a one-time bump in the road.

In a CNBC interview, Chicago Fed President Austan Goolsbee (a voting FOMC member) noted that inflation readings have been mixed. He cautioned against overreacting to a single month's data, emphasizing the need to discern which price increases can be disregarded.

U.S. Treasuries ended Friday with losses across the curve, as the 2-year note returned to unchanged for the week while longer tenors extended this week's losses. The 2-year note yield settled up two basis points to 3.76% (unchanged this week), and the 10-year note yield settled up four basis points to 4.33% (+4 basis points this week). 

• Nasdaq Composite: +12.0% YTD
• S&P 500: +9.7% YTD
• DJIA: +5.7% YTD
• Russell 2000: +2.5% YTD
• S&P Mid Cap 400: +1.7 YTD

Reviewing today's data:

• July Retail Sales 0.5% (Briefing.com consensus 0.5%); Prior was revised to 0.9% from 0.6%, July Retail Sales ex-auto 0.3% (Briefing.com consensus 0.3%); Prior was revised to 0.8% from 0.5%
  • The key takeaway from the report, which isn't adjusted for inflation, is that it reflects a decent pace of consumer spending that isn't owed entirely to price increases; however, it does reveal a few points of spending caution, evidenced by the 0.6% decline in electronics and appliance stores, the 1.0% decline in building material and garden equipment and supplies dealers, and the 0.4% decline in food services and drinking places.
• August Empire State Manufacturing 11.9 (Briefing.com consensus 0.0); Prior 5.5
• July Import Prices 0.4%; Prior was revised to -0.1% from 0.1%
• July Import Prices ex-oil 0.3%; Prior was revised to -0.3% from 0.1%
• July Export Prices 0.1%; Prior 0.5%
• July Export Prices ex-ag. 0.1%; Prior 0.5%
• July Industrial Production -0.1% (Briefing.com consensus -0.1%); Prior was revised to 0.4% from 0.3%, July Capacity Utilization 77.5% (Briefing.com consensus 77.5%); Prior was revised to 77.7% from 77.6%
  • The key takeaway from the report is that industrial production activity was muted in July, with manufacturing output stalling due to output declining in all nondurable categories.
• June Business Inventories 0.2% (Briefing.com consensus 0.1%); Prior 0.0%
• August Univ. of Michigan Consumer Sentiment - Prelim 58.6 (Briefing.com consensus 61.3); Prior 61.7
  • The key takeaway from the report is that it marked the first downturn in consumer sentiment in four months, driven by rising worries about inflation.