Stock Market Update

[BRIEFING.COM] The S&P 500 (-0.6%), Nasdaq Composite (-0.5%), and DJIA (-1.1%) are lower as stocks face broad pressure in response to escalating geopolitical tensions in the Middle East.

Equity futures signaled a mostly lower opening amid renewed tensions between the U.S. and Iran, with conflicting reports of a strike against a U.S. vessel in the Strait of Hormuz. Investors were quick to buy into the opening weakness, and the major averages sat mostly higher for much of the morning. Just before midday, reports began to circulate that the UAE intercepted a wave of Iranian missiles, which sent oil prices sharply higher while stocks moved lower in broad fashion.

Additionally, The Wall Street Journal recently reported that Iran fired cruise missiles at U.S. warships.

WTI crude oil is currently up $4.14 (+4.1%) to $106.08 per barrel, and the energy sector (+0.8%) is the only S&P 500 sector that trades higher.

Renewed hostilities around the Strait of Hormuz are benefiting select fertilizer names such as CF Industries (CF 125.21, +2.52, +2.05%), but broad weakness across other components in the materials sector (-1.6%) leaves it with the widest loss at this juncture.

The industrials sector (-1.0%) holds a similar loss as courier names such as UPS (UPS 96.82, -10.74, -9.99%) and FedEx (FDX 357.90, -35.78, -9.09%) trade sharply lower after Amazon's (AMZN 270.29, +2.03, +0.76%) announcement of Amazon Supply Chain Services, which will allow the company to offer the entire shipping process for other businesses, not just its own packages.

Amazon's gain kept the consumer discretionary sector (-0.6%) at the top of the leaderboard for most of the morning, but the sector has since moved lower amid broad weakness in the majority of its components.

Elsewhere in the sector, eBay (EBAY 108.91, +4.84, +4.65%) trades higher after receiving an unsolicited acquisition offer from GameStop (GME 24.30, -2.23, -8.40%), while Norwegian Cruise Line (NCLH 17.22, -1.58, -8.43%) moves lower after missing revenue estimates and issuing disappointing guidance.

The top-weighted information technology sector (-0.4%) is also in negative territory after starting the day as an outperformer. Pressure across large chipmaker names such as Advanced Micro Devices (AMD 341.75, -18.79, -5.21%) and NVIDIA (NVDA 196.63, -1.82, -0.92%) pushes the PHLX Semiconductor Index 0.9% lower, though memory storage names Micron (MU 577.69, +35.48, +6.54%)  and Sandisk (SNDK 1238.40, +51.40, +4.33%) are extending their post-earnings rally.

Meanwhile, the iShares GS Software ETF is up 2.0% as Oracle (ORCL 181.56, +9.74, +5.67%) trades sharply higher, while Palantir Technologies (PLTR 146.76, +2.68, +1.86%) also holds a gain ahead of its earnings release after the close.

So far, today's action reflects that oil supply disruptions from the U.S.-Iran conflict are still a material headwind for stocks in the near term. The market was quick to look past this weekend's posturing from both sides, but today's missile strikes signal the potential for further escalation.

With that being said, the early losses are modest in comparison to the recent rally that has the S&P 500 and Nasdaq Composite on a five-week winning streak, with strong earnings growth last week helping drive gains even amid higher oil prices, and attention now turning to another busy slate of earnings after the close today.

Reviewing today's data:

• March Factory Orders 1.5% (Briefing.com consensus 0.5%); Prior was revised to 0.3% from 0.0%
  • The key takeaway from the report is that factory order activity ramped up in March, driven by widespread strength that was punctuated by a big increase (3.4%) in new orders for nondefense capital goods excluding aircraft.