Stock Market Update

[BRIEFING.COM] The stock market saw quite a bit of movement today as investors reacted to yesterday afternoon's slate of mega-cap earnings. The S&P 500 (-0.1%), Nasdaq Composite (-0.7%), and DJIA (+0.1%) finished mostly lower, though considerably improved from earlier levels as the broader market showed resilience in the face of some mega-cap weakness. 

A dismal reaction to Microsoft's (MSFT 433.50, -48.13, -9.99%) earnings release put pressure on tech names and most of the mega-cap complex, pushing the major averages lower out of the gate. The company beat earnings expectations, but the stock came under pressure as heavy capital spending, softer-than-hoped cloud growth, and merely in-line guidance overshadowed its strong pre-earnings rally.

ServiceNow (NOW 116.73, -12.89, -9.94%) was another notable laggard despite topping its own earnings expectations, trading lower amid a tough day for software stocks that saw the iShares GS Software ETF (IGV 92.27, -4.79, -4.94%) fall to its lowest level since late April.

The top-weighted information technology sector (-1.9%) traded as much as 4.0% lower before the broader market mounted a slow, methodical upward tick throughout the afternoon. After trading with a loss of over 2.0%, the PHLX Semiconductor Index (+0.2%) managed to nab a slight gain. 

Elsewhere in the sector, IBM (IBM 309.24, +15.08, +5.13%) captured the widest gain after posting an earnings beat and upside guidance. 

Several other S&P 500 sectors saw both their top- and bottom-performing components move sharply in reaction to earnings results.

The consumer discretionary sector (-0.6%), which was the only other sector to close with a loss wider than 0.3%, certainly reflected this trend. Royal Caribbean (RCL 345.60, +54.00, +18.52%) was among the best-performing S&P 500 names today, while Las Vegas Sands (LVS 52.71, -8.55, -13.96%) was the worst. 

Perhaps more notably, Tesla (TSLA 416.56, -14.90, -3.45%) provided weak leadership for the sector after its earnings report as mega-cap tech generally struggled.  The company beat earnings estimates, improving on last quarter's miss, but its $20 billion capital expenditure plan for 2026 raises questions about near-term growth as it shifts from a traditional EV maker to a focus on AI and robotics.

The Vanguard Mega Cap Growth ETF finished 0.8% lower, and while that certainly weighed on the major averages, it marks a substantial improvement from session lows. 

A double-digit gain from Meta Platforms (META 738.31, +69.58, +10.40%) also helped to offset the outsized weakness in Microsoft. Like Microsoft and Tesla, the company is also committed to a massive capital expenditure range for 2026, but upside Q1 revenue guidance appeared to outweigh concerns about the elevated spending outlook.

The communication services sector (+2.9%) was the best-performing S&P 500 sector by a wide margin as a result. 

Elsewhere, the energy sector (+1.1%) shed much of its sharp early gain as oil prices steadily moderated from early highs. Crude oil futures still managed to settle today's session $2.22 higher (+3.5%) at $65.38 a barrel amid escalating geopolitical tensions between the U.S. and Iran. 

Meanwhile, the real estate (+1.4%), financials (+1.1%), and industrials (+1.0%) sectors captured solid gains as the broader market steadily improved this afternoon. 

Outside of the S&P 500, the Russell 2000 (+0.1%) and S&P Mid Cap 400 (-0.1%) finished flattish after recovering from substantial early losses. 

While today's session highlighted notable divergence across mega-cap names driven by earnings, the broader market showed resilience, steadily recovering from session lows as investors bought the early weakness, suggesting that risk sentiment remains intact as investors step in on weakness. 

Attention now turns to another sizable slate of earnings after the close, including Apple (AAPL 258.01, +1.57, +0.61%), the last of the "magnificent seven" names to report this week. 

U.S. Treasuries finished Thursday with gains across the curve, sending yields on 5s and 10s back below their respective 200-day moving averages despite a soft $44 billion 7-year note auction. The 2-year note yield settled down three basis points to 3.55%, and the 10-year note yield settled down two basis points to 4.23%.

• Russell 2000: +7.0% YTD
• S&P Mid Cap 400: +5.0% YTD
• DJIA: +2.1% YTD
• Nasdaq Composite: +1.9% YTD
• S&P 500: +1.8% YTD

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.