Stock Market Update

[BRIEFING.COM] It was a tough session for stocks today as sustained pressure across mega-cap and tech stocks came without the support of the broader market from previous sessions. 

The S&P 500 (-1.2%), Nasdaq Composite (-1.6%), and DJIA (-1.2%) finished lower across the board, with the Russell 2000 (-1.8%) and S&P Mid Cap 400 (-0.5%) closing with losses as well. Today's weakness moved the S&P 500 into negative territory for the year and saw the index close below its 50-day moving average (6,882.21).

Much of today's coverage revolved around the price action of Alphabet (GOOG 331.33, -2.01, -0.60%) after its earnings report yesterday afternoon. While the company decidedly topped earnings estimates, a massive FY26 capital expenditure plan of $175-$185 billion prompted some questions about if the company can continue to generate meaningful returns with that level of spending. Though the stock was down as much as 5% this morning, it battled back throughout the session, an encouraging sign given the size and scope of losses across other mega caps.

Despite sharp early losses, the communication services sector (-0.3%) finished as one of the better-performing S&P 500 sectors today. 

The same cannot be said of the consumer discretionary sector (-2.6%), which lagged as a majority of its components traded lower, while Amazon (AMZN 222.69, -10.30, -4.42%) and Tesla (TSLA 396.93, -9.08, -2.24%) provided weak leadership ahead of Amazon's earnings after the close. 

The information technology sector (-1.7%) also logged another disappointing finish after a choppy session. Alphabet's massive capital expenditure plans were touted by many analysts as a positive for select semiconductor and AI infrastructure names, which saw the sector open to a modest gain. Despite a midday run back towards its opening levels, the sector plotted a steady retreat throughout the afternoon. 

Broadcom (AVGO 310.51, +2.46, +0.80%) ceded nearly all of its solid early gain, while NVIDIA (NVDA 171.81, -2.38, -1.37%) also finished lower after spending time in positive territory. The PHLX Semiconductor Index (-0.1%) closed with a modest loss. 

Meanwhile, software stocks continued to freefall, with the iShares GS Software ETF finishing 5.0% lower. Microsoft (MSFT 393.67, -20.52, -4.95%) was yet again a "magnificent seven" laggard. 

The Vanguard Mega Cap Growth ETF closed 1.9% lower, adding to its early losses for the year. 

Outside of the mega-cap space, the market was devoid of the rotational strength that helped somewhat limit losses in the previous two sessions. 

The materials sector (-2.8%) finished as the worst-performing S&P 500 sector, garnering some profit-taking after a hot start to the year. 

Meanwhile, the financials sector (-1.2%) also had a rough session after a solid gain yesterday.  Coinbase Global (COIN 146.12, -22.50, -13.34%) and Robinhood Markets (HOOD 72.68, -7.94, -9.85%) finished sharply lower as Bitcoin extended its recent losses with another sizable slide today, which added to the stock market's intraday volatility. Bitcoin is currently down about 13% for the day, moving below the $64,000 mark. 

Only the consumer staples (+0.3%) and utilities (+0.1%) sectors managed meager gains.  Walmart (WMT 126.94, -1.06, -0.83%) finally saw a touch of profit-taking, though the move was negated by broader strength in the sector. 

Hershey Foods (HSY 224.38, +18.59, +9.03%) made a solid upward move after a beat-and-raise earnings report, while Estee Lauder (EL 96.75, -22.86, -19.11%) was the worst-performing S&P 500 name despite topping earnings estimates of its own. 

Overall, today's action reflects the recent heightened volatility across risk assets. Alphabet's battle from session lows was an encouraging sign for the stock, but the market could be in for more volatility tomorrow in reaction to Amazon's earnings. The CBOE Volatility Index surged over 20% during the session and remains elevated at 21.59 (+15.8%), suggesting an uneasiness throughout the market as some of its weightiest names continue to face pressure this year. 

U.S. Treasuries followed their two days of quiet sideways trade with a Thursday rally that took place alongside continued weakness in tech stocks. The 2-year note yield settled down seven basis points to 3.49%, and the 10-year note yield settled down seven basis points to 4.21%. 

• S&P MidCap 400: +5.3% YTD
• Russell 2000: +3.9% YTD
• DJIA: +1.8% YTD
• S&P 500: -0.7% YTD
• Nasdaq Composite: -3.0% YTD

Reviewing today's data:

• Weekly Initial Claims 231K (Briefing.com consensus 210K); Prior 209K, Weekly Continuing Claims 1.844 mln; Prior was revised to 1.819 mln from 1.827 mln
  • The key takeaway from the report was the jump in initial claims, which hit their highest level since early December. That created some headline surprise, but to be fair, the absolute level isn't that bad.
• December JOLTS - Job Openings 6.542 mln; Prior was revised to 6.928 mln from 7.146 mln