Stock Market Update

[BRIEFING.COM] The S&P 500 (+0.6%), Nasdaq Composite (+0.8%), and DJIA (+0.6%) saw a meaningful extension of yesterday's gains after shaking off some early apprehension tied to lingering geopolitical uncertainty.

The major averages spent most of the morning in modestly negative territory as reports indicated that the Strait of Hormuz remained largely closed to tanker traffic and that Israel continued strikes against Hezbollah in Lebanon, prompting threats from Iran to abandon the fragile two-week ceasefire reached Tuesday night.

Stocks found their footing shortly before midday following a Reuters report that Israeli Prime Minister Benjamin Netanyahu directed his aides to open direct negotiations with Lebanon. Those talks are set to begin next week, and Israel has stated that it will continue to launch strikes against Hezbollah in the interim, which could lead to further volatility.

Still, the headline prompted a decisive upward move in equities and a considerable drop in oil prices. Crude oil futures settled today's session $3.49 higher (+3.7%) at $97.89 per barrel, well off session highs that saw WTI crude eclipse the $102 per barrel mark.

The energy sector (-1.2%) ceded its earlier gains in turn, finishing firmly lower. On an unrelated note, Texas Pacific Land Trust (TPL 377.97, -70.31, -15.68%) was the worst-performing S&P 500 component today after the sudden death of Murray Stahl, the company's largest shareholder and longtime board member.

The health care sector (-0.2%) was the only other S&P 500 sector to close without a gain, as the other nine sectors moved higher.

After what felt like a weeks-long drought in meaningful corporate news, the recent improvement in the geopolitical backdrop has helped reignite momentum in the AI trade, with several notable headlines involving hyperscalers emerging today.

The consumer discretionary sector (+2.5%) led the advance, supported by a sharp gain in Amazon (AMZN 233.65, +12.40, +5.60%) after CEO Andy Jassy released his annual shareholder letter, reiterating the company's willingness to make significant AI investments. The company also announced plans to invest $25 billion in data centers in Mississippi.

Meta Platforms (META 628.39, +15.97, +2.61%) also captured a solid gain after announcing an expansion of its $21 billion AI infrastructure deal with CoreWeave (CRWV 92.00, +3.10, +3.49%).

Some of those gains also made their way downstream, as stocks set to benefit from the AI data center buildout cycle put up solid performances. Corning (GLW 169.80, +4.70, +2.85%), Caterpillar (CAT 787.07, +15.49, +2.01%), and GE Vernova (GEV 968.02, +31.95, +3.41%) all traded to fresh record highs today, with the latter two names helping the industrials sector (+1.0%) notch a solid gain.

Meanwhile, the information technology (+0.4%) notched a more modest gain. There was some renewed AI enthusiasm, with Sandisk (SNDK 851.57, +70.67, +9.05%) posting another monster gain, while large chip makers such as NVIDIA (NVDA 183.94, +1.86, +1.02%) and Intel (INTC 61.72, +2.77, +4.70%) helped push the PHLX Semiconductor Index 2.1% higher.

However, those gains came at the expense of software stocks such as ServiceNow (NOW 89.81, -7.66, -7.86%) and Palantir Technologies (PLTR 130.54, -10.22, -7.26%), which pushed the iShares GS Software ETF -3.9% lower.

Elsewhere, the consumer staples (+0.9%) and utilities (+0.8%) sectors opened to solid gains amid the geopolitical uncertainty, and maintained the bulk of the gains throughout the session. Outside of the S&P 500, the Russell 2000 (+0.6%) and S&P Mid Cap 400 (+0.3%) followed a similar trajectory to the major averages.

All told, today's session marked another constructive step forward for equities, as improving geopolitical conditions provided a supportive backdrop for a continued rebound in the broader market while enthusiasm for the AI trade began to return. The market will face an important test tomorrow in the form of the March CPI report (Briefing.com consensus 0.3%), which will be the first real test of whether inflation is broadening beyond energy into the core basket.

U.S. Treasuries endured some Thursday volatility that produced a modest loss in the long bond while 5s and shorter tenors eked out slim gains. Today's $22 billion 30-year bond reopening was met with decent, but unimpressive demand. The 2-year note yield settled down one basis point at 3.78%, and the 10-year note yield finished unchanged at 4.29%. 

• S&P Mid Cap 400: +6.9% YTD
• Russell 2000: +6.2% YTD
• DJIA: +0.3% YTD
• S&P 500: -0.3% YTD
• Nasdaq Composite: -1.8% YTD

 Reviewing today's data:

• February Personal Income -0.1% (Briefing.com consensus 0.5%); Prior 0.4%, February Personal Spending 0.5% (Briefing.com consensus 0.6%); Prior was revised to 0.3% from 0.4%, February PCE Prices 0.4% (Briefing.com consensus 0.4%); Prior 0.3%, February PCE Prices - Core 0.4% (Briefing.com consensus 0.3%); Prior 0.4%
  • The key takeaway from the report is that it reflects sticky inflation pressure before the Iran war started, so it won't sway the Fed from sticking with a wait-and-see policy stance.
• Weekly Initial Claims 219K (Briefing.com consensus 215K); Prior was revised to 203K from 202K, Weekly Continuing Claims 1.794 mln; Prior was revised to 1.832 mln from 1.841 mln
  • The key takeaway from the report is that continuing claims hit their lowest level since May 11, 2024.
• Q4 GDP - Third Estimate 0.5% (Briefing.com consensus 0.7%); Prior 0.7%, Q4 GDP Deflator - Third Estimate 3.7% (Briefing.com consensus 3.8%); Prior 3.8%
  • The key takeaway from the report is that it suggests the economy closed last year on a sluggish note; however, it wasn't quite as soft as it appears when taking into account that real final sales to private domestic purchasers were up 1.8%.
• February Wholesale Inventories 0.8% (Briefing.com consensus -0.2%); Prior -0.3%