Stock Market Update

[BRIEFING.COM] The S&P 500 (-0.3%), Nasdaq Composite (-0.8%), and DJIA (-0.1%) trade with modest losses, as some weakness across mega-cap tech names weighs against strong participation in the broader market that helped the major averages trade mostly higher for some time. 

Stocks opened lower across the board this morning following yesterday's rally, which was driven by optimism surrounding a potential de-escalation in the Iran conflict after President Trump indicated that the U.S. and Iran had engaged in ceasefire discussions. Iran continues to deny the claims, which has contributed to a rebound in oil prices today. Crude oil futures settled 10% lower in yesterday's session, while WTI crude oil currently trades $4.32 (+4.5%) higher at $92.45 per barrel. 

However, CBS News and other outlets have reported that the U.S. has at least reached out to Iran through mediators, with the lingering optimism of an off-ramp to the conflict helping stocks rise off their early lows despite the higher price of oil. 

Only four S&P 500 sectors remain in negative territory, though the underperformance of mega-cap stocks keeps the major averages from charting gains. The communication services sector (-1.8%) is an outlier as Alphabet (GOOG 290.95, -8.07, -2.70%) and Meta Platforms (META 595.46, -8.60, -1.42%) both trade lower, while Microsoft (MSFT 373.68, -9.32, -2.43%) is a laggard in the information technology sector (-0.5%) amid a tough day for software names. 

The iShares GS Software ETF is down 3.9%, but a 1.1% gain in the PHLX Semiconductor Index and strong gains in Corning (GLW 142.85, +11.88, +9.07%) and other electrical component stocks help limit losses in the technology sector. 

The Vanguard Mega Cap Growth ETF is down 1.0%, which contributes to the underperformance of the market-weighted S&P 500 (-0.1%) relative to the S&P 500 Equal-Weighted Index (+0.5%). 

Meanwhile, the energy sector (+2.5%) outperforms amid the rebound in oil prices, while tensions in the Strait of Hormuz also drive sharp gains across fertilizer names, which lead strength in the materials sector (+2.1%). 

Elsewhere, the defensive utilities (+1.6%) and consumer staples (+0.9%) sectors hold solid gains as mega-cap tech names trail today. 

Outside of the S&P 500, the Russell 2000 (+0.7%) and S&P Mid Cap 400 (+1.1%) have shaken off their early losses and now outperform the major averages. 

So far, the broader market has shown resilience despite the rebound in oil prices, with solid participation outside of mega-cap tech helping stocks recover from their early lows. Still, the flattish performance of the major averages suggests a cautious tone as investors await further developments surrounding Iran, while the 200-day moving averages for the major indices continue to act as resistance.

Reviewing today's data:

• Q4 Productivity - Revised 1.8% (Briefing.com consensus 2.5%); Prior revised to 4.9% from 2.8%, Q4 Unit Labor Costs - Revised 4.4% (Briefing.com consensus 3.1%); Prior revised to -1.9%% from 2.8%
  • The key takeaway from the report is the dichotomy of lower productivity and higher unit labor costs, the latter of which will contribute to the Fed's reticence to cut rates soon (even though this is a dated report).
• March S&P Global U.S. Manufacturing PMI - Prelim 52.4; Prior 51.6
• March S&P Global U.S. Services PMI - Prelim 51.1; Prior 51.7