Stock Market Update

[BRIEFING.COM] The stock market's first full session after yesterday's FOMC meeting saw the S&P 500 (+0.5%), Nasdaq Composite (+1.0%), and DJIA (+0.3%) capture record intraday and closing highs on relatively broad strength and big tech outperformance.

Perhaps even more notably, optimism around further policy easing from the Fed also propelled the Russell 2000 (+2.5%) past its record intraday high from November 2024 and its record closing high from November 2021. The S&P Mid Cap 400 (+1.3%) also notched a healthy gain.

Market participants were presumably enthused by heightened probabilities of additional rate cuts in October and December. According to the CME FedWatch Tool, the probability of a 25 basis point cut to 3.75-4.00% at the October FOMC meeting is 91.9%, versus 78.2% shortly before yesterday's announcement, while the probability of another 25 basis point cut to 3.50-3.75% at the December FOMC meeting is 82.3%, versus 72.8% shortly before yesterday's announcement.

Mega-cap tech helped pace the broader advance after rebounding from yesterday's drag on index-level performance. NVIDIA (NVDA 176.24, +5.95, +3.49%) reclaimed its 50-day moving average (175.28), while Intel (INTC 32.07, +7.17, +28.79%) surged after announcing that NVIDIA will take a $5 billion equity stake in the company as part of a multi-year collaboration to co-develop custom data center and PC products.

The PHLX Semiconductor Index ended the day with a 3.6% gain, while the broader information technology sector (+1.3%) finished as the top-performing S&P 500 sector. 

The industrials sector (+1.1%) also outperformed, while five other sectors finished with more modest gains.

Sector performance fluctuated through the session, but losses were limited, with only the consumer staples (-1.0%) and consumer discretionary (-0.5%) sectors finishing with losses of 0.5% or wider.

Broader market strength saw the S&P 500 Equal Weighted Index (+0.7%) outperform the market-weighted S&P 500 (+0.5%), though mega-cap names still contributed to today's advance, with the Vanguard Mega Cap Growth ETF closing with a 0.5% gain. 

Advancers outpaced decliners by a nearly 2-to-1 ratio on the NYSE and a roughly 8-to-3 clip on the Nasdaq. 

Companies that reported earnings this morning were among the names in decline, with Darden Restaurants (DRI 192.74, -16.05, -7.69%) and Cracker Barrel's (CBRL 45.80, -3.79, -7.64%) earnings misses weighing on other fast casual dining names, while FactSet (FDS 301.05, -34.99, -10.41%) dragged down its peer S&P Global (SPGI 507.84, -36.26, -6.67%) with a miss of its own. 

U.S. Treasuries followed yesterday's post-FOMC retreat with a modestly higher start that faced resistance immediately after the open with solid economic data contributing to the early selling. Weekly Initial Claims dropped from their highest level since mid-2023, while the Philadelphia Fed Survey (23.2; Briefing.com consensus 3.0) showed an acceleration in manufacturing activity. 

The 2-year note yield settled up two basis points to 3.57%, and the 10-year note yield settled up three basis points to 4.10%. 

• Nasdaq Composite: +16.4% YTD
• S&P 500: +12.8% YTD
• Russell 2000: +10.7% YTD
• DJIA: +8.5% YTD
• S&P Mid Cap 400: +6.0% YTD

Reviewing today's data:

• Initial jobless claims for the week ending September 13 decreased by 33,000 to 231,000 (Briefing.com consensus: 245,000) following an upwardly revised 264,000 (from 263,000) in the prior week. Continuing jobless claims for the week ending September 6 decreased by 7,000 to 1.920 million.
  • The key takeaway from the report is that initial claims settled back from what appeared to be an aberrantly high level in the prior week, returning to an area that is more consistent with a job market where layoff activity is relatively low.
• The Philadelphia Fed Index surged to 23.2 for September (Briefing.com consensus: 3.0) from -0.3 in August, with the new orders index climbing to 12.4 from -1.9 and the prices paid index dropping to 46.8 from 66.8. The dividing line between expansion and contraction for this report is 0.0, so the September reading represents an acceleration in manufacturing activity in the Philadelphia Fed region.
  • The key takeaway from the report is found in the welcome combination of stronger growth and fading prices.
• Conference Board's Leading Economic Index was down 0.5% in August (Briefing.com consensus -0.1%) after a revised 0.1% increase (from -0.1%) in July.