Stock Market Update

[BRIEFING.COM] The stock market is lower across the board following a slate of mega-cap earnings reports after the close yesterday. The DJIA (-0.3%) holds the narrowest loss amid mixed strength in the broader market, while considerable weakness in mega-cap and tech names keeps the S&P 500 (-0.7%) and DJIA (-1.4%) firmly lower, though they too are modestly improved from session lows. 

The top-weighted information technology sector (-2.8%) traded as much as 4.0% lower as Microsoft (MSFT 424.77, -56.86, -11.80%) has sold off sharply following its earnings release. The company topped earnings expectations, but massive capital expenditures combined with somewhat underwhelming cloud services growth and guidance that was just in-line with expectations weighed on the stock that had a nice run higher into its earnings report. 

Elsewhere in the sector, First Solar (FSLR 220.51, -28.90, -11.59%) also lags after BMO Capital downgraded the stock to Market Perform from Outperform with a $263 target, while IBM (IBM 312.41, +18.25, +6.20%) trades sharply higher after an impressive earnings report and bullish guidance. 

The consumer discretionary sector (-0.7%) is the only other S&P 500 sector that holds a loss of 0.5% or wider.  Tesla (TSLA 423.16, -8.30, -1.92%) provides weak leadership after its own earnings report. The company topped earnings estimates, which was an improvement after a miss last quarter, but a massive $20 billion capital expenditure guide for 2026 calls into question the near-term growth potential as the company looks to pivot from a traditional EV maker to an AI and robotics powerhouse.

Amazon (AMZN 239.70, -3.31, -1.36%) also trades lower, which helps further mask solid gains across travel-related names today after Royal Caribbean's (RCL 331.58, +39.98, +13.71%) earnings release. 

The Vanguard Mega Cap Growth ETF is down 1.8% today, with the market-weighted S&P 500 (-0.8%) underperforming the S&P 500 Equal Weighted Index (-0.1%) as a result. 

Meta Platforms (META 730.33, +61.60, +9.21%), however, is a mega-cap standout after a decisive earnings beat. The company is also committed to a massive capital expenditure range for 2026, but upside Q1 revenue guidance appears to be outweighing concerns about the elevated spending outlook.

The communication services sector (+1.7%) is now the best-performing S&P 500 sector of the day. 

Elsewhere, the energy sector (+1.6%) holds a similar gain as the price of oil increased $2.24 (+3.5%) to $65.42 per barrel amid escalating tensions between the U.S. and Iran. 

While sector strength has tilted positive for most of the session, only five S&P 500 sectors remain above their unchanged levels as the market's modest rebound from session lows has met some resistance. 

Outside of the S&P 500, the Russell 2000 (-0.5%) and S&P Mid Cap 400 (-0.6%) are also under pressure today. 

So far, today’s action has been defined by a broad pullback in mega-cap names following Microsoft’s retreat. The move is not entirely surprising, as the major averages were hovering near record highs, leaving earnings from the market’s heaviest-weighted names priced for perfection.

In addition to the earnings-heavy action, the Senate recently failed to pass a government bill, making a shutdown this weekend a likely possibility. However, both sides are working on a compromise to limit the time of the government shutdown.

 Reviewing today's data:

• November Trade Balance -$56.8 bln (Briefing.com consensus -$43.5 bln); Prior was revised to -$29.2 bln from -$29.4 bln
  • The key takeaway from the report is that it will create a drag on Q4 GDP growth expectations. A possible silver lining, though, is that the import activity could be construed as a reflection of increased demand in the U.S.
• Weekly Initial Claims 209K (Briefing.com consensus 205K); Prior was revised to 210K from 200K, Weekly Continuing Claims 1.827 mln; Prior was revised to 1.865 mln from 1.849 mln
  • The key takeaway from the report is that it corroborates the idea that labor market conditions are still reasonably good to promote solid consumer spending activity that will be supportive of ongoing economic growth and a Fed that can show more patience before cutting rates again.
• Q3 Productivity - Revised 4.9% (Briefing.com consensus 4.9%); Prior 4.9%, Q3 Unit Labor Costs - Revised -1.9% (Briefing.com consensus -1.9%); Prior -1.9%
  • With no changes, the key takeaway remained the same: this productivity report is the golden ticket for the economy (and the Fed, per chance), as it reflects strong growth without labor cost inflation.
• November Wholesale Inventories 0.2% (Briefing.com consensus 0.1%); Prior was revised to 0.2% from 0.5%
• November Factory Orders 2.7% (Briefing.com consensus 0.5%); Prior was revised to -1.2% from -1.3%
  • The key takeaway from the report is that transportation equipment orders, which are volatile, drove the increase in total factory orders.