Stock Market Update

[BRIEFING.COM] After some modest opening gains, the major averages moved sharply lower around midmorning. The S&P 500 (-1.2%), Nasdaq Composite (-1.7%), and DJIA (-1.3%) sit a touch off of session lows shortly after midday.

Early weakness was largely confined to the information technology sector (-1.9%), which has widened its loss to remain near the bottom of the leaderboard. 

Despite a solid beat-and-raise earnings report, AppLovin (APP 372.99, -83.82, -18.35%) is one of the worst-performing S&P 500 names today, which contributes to the recent pressure across the software space. The iShares GS Software ETF (IGV) is down 3.7%, with Palantir Technologies (PLTR 127.63, -8.05, -5.93%) another notable laggard. 

Cisco (CSCO 75.64, -9.90, -11.57%) is also lower despite a beat-and-raise report of its own. The company warned that higher memory costs will be adversely affecting its profit margins, which weighs on other hardware names such as Dell (DELL 112.52, -11.64, -9.37%) and Apple (AAPL 262.54, -12.96, -4.71%). 

The financials sector (-2.2%) is another laggard, with today's weakness moving the sector 5.0% lower for the week. The sector has faced pressure amid fears of AI disruption across financial services stocks. 

Meanwhile, Robinhood Markets (HOOD 70.83, -7.14, -9.16%) continues to move lower after its earnings, with weakness in Bitcoin accentuating the pressure. 

Amazon (AMZN 199.61, -4.47, -2.19%) is also devoid of any buying support after its earnings release last week, which weighs on the consumer discretionary sector (-1.6%). Weakness across the market's weightiest components has the Vanguard Mega Cap Growth ETF down 1.4%.

Elsewhere, the energy sector (-2.3%) now holds the widest loss as the price of oil falls $2.02 (-3.1%) to $62.61 per barrel. 

Amid the weakness in growth stocks today, the defensive utilities (+1.8%) and consumer staples (+1.6%) sectors are sharply higher today. Exelon (EXC 47.74, +3.29, +7.40%) moves higher after an earnings beat, while Walmart (WMT 132.85, +4.08, +3.17%) sees another session of solid growth.

The real estate (+0.5%) and health care (+0.2%) sectors hold more modest gains. 

Outside of the S&P 500, the Russell 2000 (-2.0%) and S&P Mid Cap 400 (-1.4%) are charting session lows in a similar fashion to the major averages. 

After several quiet sessions this week, renewed pressure from fears of AI disruption has sparked a broad de-risking trade, with investors rotating out of growth and cyclical areas in favor of more defensive groups.

Reviewing today's data:

• Weekly Initial Claims 227K (Briefing.com consensus 230K); Prior was revised to 232K from 231K, Weekly Continuing Claims 1.862 mln; Prior was revised to 1.841 mln from 1.844 mln
  • The key takeaway from the report is its steady messaging that layoff activity is low and that hiring activity is slow.
• January Existing Home Sales 3.91 mln (Briefing.com consensus 4.21 mln); Prior was revised to 4.27 mln from 4.35 mln
  • The key takeaway from the report is that the existing home market remains supply constrained. That is pushing up prices and mitigating some of the affordability benefits linked to wage growth and lower mortgage rates.