Stock Market Update

[BRIEFING.COM] The S&P 500 (-0.2%), Nasdaq Composite (-0.3%), and DJIA (-0.6%) are near session lows early in the afternoon as a surge in oil prices and another weak showing from mega-cap stocks weigh against a mostly constructive batch of earnings reports this morning.

Crude oil is currently up $6.84 (+6.8%) to $106.77 per barrel after The Wall Street Journal reported that President Trump has told his aides to prepare for an extended blockade of Iran in order to compel it to give up its nuclear ambitions. Unsurprisingly, airlines, cruise lines, homebuilders, and other oil-sensitive stocks are lower today.

The effect of rising energy prices on inflation expectations will soon come into focus with the 2:00 p.m. ET April FOMC decision. The decision itself is not expected to produce any surprises, with the market fully pricing in the Fed leaving rates unchanged, but the subsequent press conference will be watched closely for any indications of how policymakers are interpreting recent inflation trends and whether energy-driven price pressures could shift the rate path going forward.

In the meantime, stocks are facing broad weakness, as the energy sector (+2.3%) is the only S&P 500 sector that holds a gain.

Despite the weakness at the sector level, there are numerous notable earnings-driven moves that are somewhat helping limit the broad losses.

Visa's (V 337.91, +28.61, +9.25%) beat-and-raise report helps offset broader weakness in the financials sector (flat), while Starbucks (SBUX 105.64, +8.36, +8.59%) delivered growth on both the top and bottom lines for the first time in over two years, with its gain leading the consumer discretionary sector (-0.3%).

Meanwhile, Seagate Tech's (STX 648.65, +69.62, +12.02%) blowout report has helped restore some momentum to the semiconductor space, with the PHLX Semiconductor Index up 1.3%.

However, the top-weighted information technology sector (-0.3%) remains lower amid poor mega-cap leadership and weakness across software names.

Microsoft (MSFT 422.23, -7.02, -1.64%) is a laggard ahead of its earnings release after the close, while Amazon (AMZN 261.32, +1.62, +0.62%), Alphabet (GOOG 346.22, -1.28, -0.37%), and Meta Platforms (META 667.98, -3.36, -0.50%) are also set to report their earnings. The Vanguard Mega Cap Growth ETF is down 0.5%.

All told, today's action reflects a more cautious tone, with higher energy prices and fading mega-cap leadership keeping pressure on the major averages ahead of the Fed decision and a critical round of earnings after the close.

Reviewing today's data:

• Weekly MBA Mortgage Applications Index -1.6%; Prior 7.9%
• February Housing Starts 1.356 mln; Prior was revised to 1.398 mln from 1.487 mln, February Building Permits 1.538 mln; Prior was revised to 1.386 mln from 1.376 mln, March Housing Starts 1.502 mln; Prior 1.356 mln, March Building Permits 1.372 mln; Prior 1.538 mln
  • The key takeaway from the report is that there was broad-based strength in starts by region but also broad-based weakness in permits by region. The latter is the better indicator for the impact of the Iran war and the uncertainty it has created because permits are a leading indicator.
• March Durable Orders 0.8% (Briefing.com consensus 0.5%); Prior was revised to -1.2% from -1.4%, March Durable Goods -ex transportation 0.9% (Briefing.com consensus 0.6%); Prior was revised to 1.2% from 0.8%
  • The key takeaway from the report is that there was a big jump (+3.3%) in new orders for nondefense capital goods excluding aircraft. This is a proxy for business spending, and it is believed to reflect in part the pickup in capital expenditures for AI initiatives.
• March Adv. Intl. Trade in Goods -$87.9 bln; Prior -$83.5 bln
• March Adv. Retail Inventories 0.7%; Prior 0.3%
• March Adv. Wholesale Inventories 1.4%; Prior 0.9%