Stock Market Update

[BRIEFING.COM] Stocks are looking to end a choppy week on a higher note, with the S&P 500 (+0.6%), Nasdaq Composite (+0.5%), and DJIA (+0.8%) holding near session highs early in the afternoon.

The major averages are supported by broad strength and solid tech leadership despite inflation expectations driving up the probability of a rate hike. Oil prices have remained relatively stable today, though shorter-tenor Treasury yields continue to face upward pressure after Fed Governor Christopher Waller (voting FOMC member) said he would need to see improvement on inflation to consider a rate reduction. The CME FedWatch tool now assigns a greater than 50% probability of a rate hike at the October FOMC meeting, marking a notable shift in expectations under new Fed Chair Kevin Warsh, who was just sworn in.

Even so, the market is showing resilience today ahead of the long holiday weekend.

The top-weighted information technology sector (+0.9%) is contributing to the index-level advance, supported by gains across several key groups. Semiconductor names are extending yesterday's advance, with the PHLX Semiconductor Index up 2.4% as Qualcomm (QCOM 237.36, +23.94, +11.22%) trades sharply higher while Advanced Micro Devices (AMD 470.59, +21.00, +4.67%) holds a nice gain after announcing plans to increase CPU production with Taiwanese partners.

TheiShares GS Software ETF (IGV 94.25, +1.77, +1.91%) also holds a solid gain as Workday (WDAY 128.68, +6.83, +5.61%) moves higher after earnings.

Though not a component of the S&P 500, Lenovo (LNVGY 40.11, +6.19, +18.25%) earnings report has prompted sharp gains across other hardware names such as Dell (DELL 294.70, +41.90, +16.57%) and HP Inc. (HPQ 25.26, +3.36, +15.32%).

Elsewhere, the health care sector (+1.2%) holds the widest gain, with Merck (MRK 121.92, +6.04, +5.21%) pacing the advance after several positive updates related to the company's oncology drugs.

The industrials sector (+1.0%) holds a similar gain, with Generac (GNRC 267.87, +20.08, +8.10%) moving sharply higher after Jefferies upgraded the stock to Buy from Hold.

Overall, today’s session suggests investors remain willing to look past a more hawkish rate backdrop, with several notable post-earnings moves and renewed momentum across market leaders keeping the major averages on the doorstep of record highs.

Reviewing today's data:

• The final reading for the University of Michigan Consumer Sentiment Index for May dropped to 44.8 (Briefing.com consensus: 48.2) from the preliminary reading of 48.2, marking a new historic low. The final reading for April was 49.8. In the same period a year ago, the index stood at 52.2.
  
  • The key takeaway from the report is that consumers are clearly concerned about rising costs and their ability to out-earn inflation, which they are concerned will increase beyond fuel prices.
• The April leading Economic Index checked in at 0.1% (Briefing.com consensus -0.3%), from the prior reading of -0.6%.