Stock Market Update

[BRIEFING.COM] Stocks had a solid session today, though they finished off their session highs as the market reacted to the release of the January FOMC minutes this afternoon. 

Several participants indicated that they would have supported a two-sided description of the Committee's future interest rate decisions, reflecting the possibility that upward adjustments to the target range for the federal funds rate could be appropriate if inflation remains at above-target levels. Still, the market's expected timeline for its next rate cut remains relatively unchanged. While there was some profit-taking in reaction to the release, the market reversed its downward course and moved higher for the final half hour of the session. 

The S&P 500 (+0.6%), Nasdaq Composite (+0.8%), and DJIA (+0.3%) finished with roughly half of their earlier gains, supported by solid mega-cap leadership and relatively broad strength. The S&P 500 moved back into positive territory for the year, eclipsing its 50-day moving average (6,894.53) in the session but failing to close above the level. 

Strength was broad, with eight S&P 500 sectors finishing with gains. 

The information technology sector (+1.2%) was among the outperformers, as mega-cap and tech names led the market higher from the open. 

Software stocks were among the outperformers, garnering some bargain-hunting interest after prolonged weakness. Cadence Design (CDNS 305.01, +21.55, +7.60%) finished with the widest gain after Rosenblatt upgraded the stock to Buy from Neutral, while AppLovin (APP 404.39, +28.01, +7.44%) posted a similar gain. Even Microsoft (MSFT 399.60, +2.74, +0.69%), which has struggled in recent weeks following its latest earnings release, notched a higher finish. The iShares GS Software ETF finished 1.3% higher

NVIDIA (NVDA 187.98, +3.01, +1.63%) performed even better, contributing to the PHLX Semiconductor Index's 1.0% gain. Micron (MU 420.95, +21.17, +5.30%) and other memory storage names rebounded particularly well from a weaker showing yesterday. 

Amazon (AMZN 204.79, +3.64, +1.81%) was another mega-cap standout, helping the consumer discretionary sector (+1.0%) finish higher. All told, the Vanguard Mega Cap Growth ETF (+0.6%) captured a nice gain despite some profit-taking in the afternoon. 

Elsewhere in the sector, Garmin (GRMN 236.95, +19.97, +9.20%) was one of the top-performing S&P 500 names after an earnigns beat, while MGM Resorts (MGM 37.17, +2.90, +8.46%) finished similarly amid a strong day for casino stocks after Caesars Entertainment's (CZR 21.42, +2.47, +13.03%) earnings release. 

Global Payments (GPN 81.25, +11.48, +16.46%) was the S&P 500's top performer as a result of its own earnings beat, leading strength in the financials sector (+0.8%), which benefitted from some buying activity across financial publishing and servicing stocks that have recently slid amid fears of AI disruption. 

Meanwhile, this year's best-performing sector, the energy sector (+2.0%), once again captured the widest gain. Crude oil futures settled today's session $2.66 higher (+4.3%) at $64.99 per barrel as tensions between the U.S. and Iran escalate, with reports that both sides are preparing for military conflict. 

With growth and cyclical stocks mounting solid gains today, weakness was limited to the defensive utilities (-1.7%) and consumer staples (-0.5%) sectors, while the real estate sector (-1.5) also retreated. 

Outside of the S&P 500, the Russell 2000 (+0.5%) and S&P Mid Cap 400 (+0.5%) followed a similar trajectory to the major averages, finishing with around half of their earlier gains. 

Ultimately, today's session was an encouraging sign given last week's volatility and yesterday's flattish showing. While the January FOMC minutes carried a hawkish tilt that trimmed some of the market's earlier strength, the major averages still posted solid gains, supported by firm mega-cap leadership and constructive breadth. The ability to rebound after the initial reaction to the minutes suggests underlying demand remains intact, even as rate-cut expectations stay largely unchanged.

U.S. Treasuries had a modestly lower showing on Wednesday that pressured the complex from January highs that were reached during Tuesday's session. The 2-year note yield settled up two basis points to 3.46%, and the 10-year note yield settled up three basis points to 4.08%. 

• S&P Mid Cap 400: +8.5% YTD
• Russell 2000: +7.1% YTD
• DJIA: +3.3% YTD
• S&P 500: +0.5% YTD
• Nasdaq Composite: -2.1% YTD

Reviewing today's data:

• Weekly MBA Mortgage Applications Index 2.8%; Prior -0.3%
• December Housing Starts 1.404 mln (Briefing.com consensus 1.320 mln); Prior 1.322 mln, December Building Permits 1.448 mln (Briefing.com consensus 1.412 mln); Prior 1.388 mln
  • The key takeaway from the report is that it is not the answer for a supply-constrained housing market. Single-unit permits were down overall, but they fell the sharpest in the South (-5.3%), which is the nation's largest homebuilding region.
• December Durable Orders -1.4% (Briefing.com consensus -2.6%); Prior was revised to 5.4% from 5.3%, December Durable Orders - ex transportation 0.9% (Briefing.com consensus 0.3%); Prior was revised to 0.4% from 0.5%
  • The key takeaway from the report is that the weakness was concentrated in the transportation component. Otherwise, it was a solid report featuring a 0.6% increase in nondefense capital goods orders, excluding aircraft, which is a key gauge of business spending.
• December Industrial Production 0.7% (Briefing.com consensus 0.4%); Prior was revised to 0.2% from 0.4%, December Capacity Utilization 76.2% (Briefing.com consensus 76.5%); Prior was revised to 75.7% from 76.3%
  • The key takeaway from the report is that industrial production growth easily exceeded estimates thanks to a healthy 0.6% increase in manufacturing output, which was the biggest since February 2025, and a secondary boost from an increase in the output of utilities.