Stock Market Update

[BRIEFING.COM] Recent updates on the geopolitical front have stocks charting a higher course after some initial apprehension kept the major averages near their flatlines for most of the session.

The major averages drifted sideways as the Strait of Hormuz remained effectively closed and Israel continued strikes against Hezbollah in Lebanon, both of which threatened to upend the two-week ceasefire agreement.

Shortly before midday, Reuters reported that Israeli Prime Minister Benjamin Netanyahu instructed his cabinet to begin direct negotiations with Lebanon. The S&P 500 (+0.7%), Nasdaq Composite (+0.8%), and DJIA (+0.8%) quickly moved into positive territory, while oil prices backed off their earlier highs. Crude oil is still up $3.76 (+4.0%) to $98.17 per barrel, though it has given up about half of its strength that saw it eclipse the $102 per barrel mark.

Strength in the broader market was mixed for most of the session, but now leans definitively positive, with just two S&P 500 sectors failing to chart a gain.

The energy sector (-1.1%) unsurprisingly has retreated in tandem with oil prices, now firmly lower after trading nearly 1.5% higher this morning.

The top-weighted information technology sector (flat) is also a relative underperformer as software names such as Palantir Technologies (PLTR 130.14, -10.62, -7.54%) and Autodesk (ADSK 219.50, -21.14, -8.79%) come under acute pressure, sending the iShares GS Software ETF 4.2% lower.

Meanwhile, the nine other S&P 500 sectors trade higher, with a few increasingly solid gains in the mix. The consumer discretionary sector (+2.1%) leads the advance, supported by strong leadership from Amazon (AMZN 231.02, +9.77, +4.41%). The company's CEO Andy Jassy released his annual shareholder letter in which he reiterated the company's willingness for massive AI investments. The company announced plans today to invest $25 billion in Mississippi data centers.

Elsewhere, a push to record highs for GE Vernova (GEV 976.40, +40.33, +4.31%) helps the industrials sector (+1.4%) trade higher, while the defensive utilities (+1.6%) and consumer staples (+1.0%) sectors maintain their solid early gains.

Outside of the S&P 500, the Russell 2000 (+0.6%) and S&P Mid Cap 400 (+0.4%) are also rebounding from their earlier lows.

The latest reports suggest the U.S. and Iran are set to begin negotiations this weekend, while Israel and Lebanon will engage in talks next week. The market's attention to oil prices will no doubt keep investors attuned to any developments in the interim, but for now, stocks appear comfortable advancing within reason as geopolitical tensions show tentative signs of easing.

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%