Stock Market Update

[BRIEFING.COM] The stock market has traded gingerly through today's session, unsure if the next leg of note is higher or lower. A case can be made for both directions given some of the speculative energy in the market and the strong earnings growth. The former has taken some stocks parabolic, while the latter has kept many stocks in good stead.

There is a push-and-pull today in the information technology sector (-0.8%) and throughout the broader market.

The software stocks are weak, with private credit worries back in the mix and both ServiceNow (NOW 84.62, -18.45, -17.90%) and IBM (IBM 228.15, -23.71, -9.41%) trading sharply lower after their earnings reports. The semiconductor stocks are strong, underpinned by leadership from Texas Instruments (TXN 282.91, +46.60, +19.72%) after its upbeat report and outlook.

Flipping the script from yesterday, the mega-cap cohort is a laggard, which is weighing on the market cap-weighted indices, but rotational interest is affording small-cap and mid-cap stocks with relative strength. Separately, the equal-weighted S&P 500 is up 0.1% on a day when the Vanguard Mega Cap Growth Index Fund (MGK 83.36, -0.68, -0.81%) is down 0.8%.

This bull market, then, is standing its ground as it waits to see if the U.S. and Iran take higher ground to a lasting ceasefire and if the Q1 earnings reporting period continues to exceed high expectations.

Tesla (TSLA 377.61, -9.90, -2.56%) helped the general reporting cause with its report last night, but it didn't help its specific cause when Elon Musk offered the vague guidance that the company expects to see a very significant increase in capex.

Other laggards of note following their earnings reports include Honeywell (HON 214.89, -5.08, -2.31%), Southwest Air (LUV 38.29, -1.06, -2.69%), Las Vegas Sands (LVS 51.32, -5.53, -9.73%), and Lockheed Martin (LMT 524.73, -30.70, -5.53%). But there has generally been an equal and opposite earnings-reporting reaction among other stocks.

United Rentals (URI 993.22, +190.43, +23.72%), Packaging Corp (PKG 221.80, +16.56, +8.07%), Dover (DOV 231.41, +15.24, +7.05%), and Molina Healthcare (MOH 169.78, +16.78, +10.97%) are among today's big winners.

The result is a broader market that is flat and in a digestive mode after a big run. The 10-yr note yield, in turn, is flat at 4.30%.

Reviewing today's economic data:

• Initial jobless claims for the week ending April 18 increased by 6,000 to 214,000 (Briefing.com consensus: 212,000). Continuing jobless claims for the week ending April 11 increased by 12,000 to 1.821 million.
  • The key takeaway from the report is that there is nothing in the level of initial jobless claims—a leading indicator—that suggests the labor market is in a dire state.
• The preliminary April S&P Global U.S. Manufacturing PMI checked in at 54.0 vs. 52.3 prior.
• The preliminary April S&P Global U.S. Services PMI checked in at 51.3 vs. 49.8 prior.