Stock Market Update

[BRIEFING.COM] The stock market faced pressure from multiple fronts, including higher oil prices, rising Treasury yields, and pronounced weakness across mega-cap stocks, which saw the S&P 500 (-1.7%), Nasdaq Composite (-2.4%), and DJIA (-1.0%) steadily chart session lows throughout the day.

There was some lingering optimism in the broader market after yesterday's higher finish, which kept the DJIA in positive territory for some of the morning, though a combination of pressures eventually culminated in broad weakness. 

On the geopolitical front, Iran rejected the 15-point peace plan set forth by the U.S., and while the current state of negotiations remains far from transparent, rhetoric on both sides took a more hostile tone today. Iran continued to strike energy infrastructure targets across the region, which has prompted neighboring Gulf states to prepare for military intervention. Additionally, reports circulated that the Pentagon is preparing to send more troops to the Middle East as the potential for a ground conflict escalates. 

Crude oil futures settled today's session $4.10 higher (+4.5%) at $94.43 per barrel, which pushed Treasury yields as inflation concerns mount. 

Unlike the DJIA, the S&P 500 and Nasdaq Composite charted a lower course much earlier in the session, which was largely a product of significant weakness across mega-cap and tech stocks. 

The communication services sector (-3.5%) closed considerably lower as Meta Platforms (META 547.75, -47.14, -7.92%) and Alphabet (GOOG 280.74, -8.85, -3.06%) faced a continuation of yesterday's weakness after a court found the companies liable in a social media addiction case that alleges they specifically target younger users. Bloomberg reported on the case and warned that social media companies could face fallout akin to that of large tobacco companies. 

The top-weighted information technology sector (-2.7%) was another laggard as semiconductor stocks rolled over today. NVIDIA (NVDA 171.24, -7.44, -4.16%) had a tough session, but its losses could almost be described as tame compared to other stocks such as Advanced Micro Devices (AMD 203.77, -16.50, -7.49%) and Micron (MU 355.62, -26.47, -6.93%). The PHLX Semiconductor Index finished 4.8% lower, moving it into negative week-to-date territory. 

All told, the Vanguard Mega Cap Growth ETF (-2.6%) moved considerably lower, and the market-weighted S&P 500 (-1.7%) underperformed the S&P 500 Equal Weighted Index (-1.0%). 

The consumer discretionary sector (-1.9%) also faced broad weakness and poor mega-cap leadership, while the industrials sector (-2.3%) moved lower as industrial machinery names such as Lennox Int'l (LII 438.29, -43.39, -9.01%) retreated sharply. 

The energy sector (+1.6%) outperformed amid rising oil prices, with Valero Energy (VLO 248.14, +13.60, +5.80%) a notable standout. 

The real estate sector (+0.2%) captured a more modest gain, while the defensive utilities sector managed to finish flat. 

All told, today's pressures leave the major averages mostly lower entering the final session of the week. Action has been choppy so far as stocks track volatility in oil prices, but the broader trend remains lower as the major averages slip further below their respective 200-day moving averages. Absent clarity on the geopolitical front and stabilization in oil prices and yields, the path of least resistance for stocks appears tilted to the downside. 

U.S. Treasuries continued this week's volatility with a Thursday slide that left yields on the 10-year note and shorter tenors at their highest closing levels of the year. Treasuries reached their worst levels shortly after today's $44 bln 7-yr note auction met weak demand, making for the third consecutive disappointing auction of this week. The 2-year note yield settled up ten basis points to 3.98%, and the 10-year note yield settled up nine basis points to 4.42%. 

• S&P Mid Cap 400: +1.8% YTD
• Russell 2000: +0.5% YTD
• DJIA: -4.4% YTD
• S&P 500: -5.4% YTD
• Nasdaq Composite: -7.9% YTD

Reviewing today's data:

• Weekly Initial Claims 210K (Briefing.com consensus 210K); Prior 205K, Weekly Continuing Claims 1.819 mln; Prior was revised to 1.851 mln from 1.857 mln
  
  • The key takeaway from the report is that it is not indicative of a weak labor market, particularly with initial jobless claims—a leading indicator—continuing to run at historically low levels.