Stock Market Update

[BRIEFING.COM] The stock market opened with broad gains this morning as oil prices moved lower, but a reversal in oil has since weighed on the broader market, pushing the major averages lower. The S&P 500 (-0.4%), Nasdaq Composite (-0.9%), and DJIA (-0.1%) remain firmly lower for the week early in Friday afternoon trading. 

Crude oil traded down near $92 per barrel this morning but has since made a decisive move higher, currently up $1.04 (+1.1%) to $96.79 per barrel. The Wall Street Journal reported that the Pentagon is sending more Marines and warships to the Middle East, potentially to help escort tankers through the Strait of Hormuz. For the time being, the market remains susceptible to volatility as oil continues to climb without a clear end in sight to the war in Iran. 

All eleven S&P 500 sectors traded higher this morning, and advancers outpaced decliners by a roughly 2-to-1 ratio. Only five S&P 500 sectors remain in positive territory, and decliners now modestly outpace advancers. 

The information technology sector (-1.0%) has had a particularly volatile session, trading more than 1.0% higher before retreating to a loss of equal magnitude. Software names are under pressure after several stronger sessions, with the iShares GS Software ETF down 1.2%. 

The PHLX Semiconductor Index (+0.1%) remains in positive territory for the time being, but it has pulled back considerably after trading more than 2.0% higher this morning. Broadcom (AVGO 324.30, -11.67, -3.47%) and Advanced Micro Devices (AMD 193.88, -3.86, -1.95%) are among the sector's weakest performers. 

Elsewhere in the sector, Adobe (ADBE 254.00, -15.78, -5.85%) lags despite topping earnings estimates after news that the company's CEO will depart once a replacement is named. 

The communication services sector (-1.0%) holds a comparable loss as Meta Platforms (META 615.85, -22.33, -3.50%) lags after reports that the company is delaying the release of its new AI model. 

Meanwhile, the defensive utilities (+1.3%) and consumer staples (+0.8%) sectors outperform amid the weakness in tech names today. 

On the data front, this morning's release of the PCE Price Index (0.3%; Briefing.com consensus: 0.3%) saw the index increase 2.8% on a year-over-year basis versus 2.9% in December, though the modest decrease in the year-over-year level offers little relief, with the market expecting higher readings in the coming months due to the increase in energy prices.

As a result, the market remains vulnerable to further increases in energy prices, which continue to dampen the market's rate cut hopes while weighing on equities.

Reviewing today's data:

• Q4 GDP was revised down to 0.7% (Briefing.com consensus 1.4%) from the advance estimate of 1.4%. The GDP Price Deflator was revised to 3.8% from 3.6% in the advance estimate.
  
  • The key takeaway from the report is that growth decelerated notably in Q4 while the Price Deflator was revised higher, which is a disappointing combination.
• Personal Income increased 0.4% month-over-month in January (Briefing.com consensus 0.4%) after rising 0.3% in December. Personal spending was also up 0.4% month-over-month (Briefing.com consensus 0.2%) following a 0.4% increase in December. The PCE Price Index rose 0.3% month-over-month (Briefing.com consensus 0.3%), while the core PCE Price Index, which excludes food and energy, rose 0.4% month-over-month (Briefing.com consensus 0.4%). On a year-over-year basis, the PCE Price Index increased 2.8% versus 2.9% in December, and the core PCE Price Index increased 3.1%, versus 3.0% in December.
  
  • The key takeaway from the report is that the Fed's preferred inflation measure, the core PCE Price Index, edged up in January, which presents a headwind to rate cut expectations.
• Durable goods orders were flat month-over-month in January (Briefing.com consensus 0.7%). Excluding transportation, durable goods orders rose 0.4% month-over-month (Briefing.com consensus 0.5%) after increasing a revised 1.3% (from 0.9%) in December.
• The key takeaway from the report is that the flat headline reading masked a solid 0.9% increase in nondefense capital goods orders, which is a proxy for business investment.
• The preliminary reading of the University of Michigan Consumer Sentiment for March fell to 55.5 (Briefing.com consensus 55.7) from the final reading of 56.6 for February. In the same period a year ago, the index stood at 57.0.
• The key takeaway from the report is that roughly half of the interviews were conducted before military action in Iran, which spurred a rally in energy prices. Therefore, the Consumer Sentiment Index is likely to be revised lower in the final reading for March.
• The January Job Openings and Labor Turnover (JOLTS) report saw 6.946 million job openings, up from an upwardly revised 6.550 (from 6.542 million).