Stock Market Update

[BRIEFING.COM] The S&P 500 (-0.2%), Nasdaq Composite (-0.2%), and DJIA (-0.6%) are moving lower lower just after midday, with software and select mega-cap names softening the broader market's pullback from yesterday's rally. The S&P 500 and Nasdaq Composite notched record highs with their earlier gains, but are now at session lows as selling pressure ramps up.

Currently, the information technology sector (+0.3%) is the only S&P 500 sector that holds a gain for the day. Software stocks are decisively winning the latest round of software vs. semiconductors battle that takes place following a sizable batch of earnings reports from software names. Fortinet (FTNT 107.65, +17.70, +19.68%) and Datadog (DDOG 182.94, +39.23, +27.30%) both hold impressive gains after beat-and-raise earnings reports, contributing to strength in the iShares GS Software ETF (+3.5%). Additionally, Microsoft (MSFT 421.70, +7.74, +1.87%) is one of the best-performing "magnificent seven" names.

Meanwhile, the PHLX Semiconductor Index is down 2.6% after yesterday's rally, though it remains over 5% higher for the week. There is some lingering strength across mega-cap names outside of the technology sector, but the Vanguard Mega Cap Growth ETF (+0.3%) has seen its gain considerably eroded, which now leaves the market-weighted S&P 500 (-0.3%) just modestly better off than the S&P 500 Equal Weighted Index (-0.5%) after diverging earlier in the session.

Losses were relatively modest across the other ten S&P 500 sectors for most of the session, though they are beginning to widen. The energy sector (-2.3%) holds the widest loss amid a choppy session for oil prices. After flirting with the $91 per barrel mark this morning, crude oil is now up $0.38 (+0.4%) to $95.46 per barrel, which has contributed to the broader market's move to session lows. The market is still awaiting Iran's response to the latest U.S. peace proposal.

Elsewhere, the industrials sector (-1.3%) lags as Caterpillar (CAT 897.70, -28.94, -3.12%) faces some profit-taking after yesterday's record highs, while electrical product names also underperform.

Outside of the software space, the latest batch of earnings reports lacks the market-moving weight of previous sessions this week. McDonald's (MCD 283.12, -0.98, -0.34%), Arm Holdings plc (ARM 214.14, -23.16, -9.76%), and DoorDash (DASH 167.64, -0.34, -0.20%) are among some of the notable names that reported, though their results have done little to shift the broader tone of the market.

Overall, today's action reflects a market that was primed for at least some consolidation following yesterday's record-setting rally and the recent stretch of broad gains. The reversal in oil prices from this morning's lows has contributed to the move to session lows, though continued strength across software names and select mega-cap stocks is helping limit the pullback at the index level. 

Reviewing today's data:

• Q1 Productivity-Prel 0.8% (Briefing.com consensus 1.8%); Prior was revised to 1.6% from 1.8%, Q1 Unit Labor Costs-Prel 2.3% (Briefing.com consensus 2.7%); Prior was revised to 4.6% from 4.4%
  • The key takeaway from the report is that, while productivity undershot expectations, unit labor costs decelerated in a move that should placate inflation hawks at the Fed. That won't change the prevailing belief that the Fed isn't going to be cutting rates soon, but it will temper some of the budding fears about entertaining the idea of a rate hike.
• Weekly Initial Claims 200K (Briefing.com consensus 205K); Prior was revised to 190K from 189K, Weekly Continuing Claims 1.766 mln; Prior was revised to 1.776 mln from 1.785 mln
  • The key takeaway from the report is its quiet disposition in the sense that it isn't showing wide swings in either initial claims or continuing claims, which suggests some welcome steadiness in the labor market.
• February Construction Spending -0.2% (Briefing.com consensus 0.2%); Prior was revised to -1.9% from -0.3%, March Construction Spending 0.6% (Briefing.com consensus 0.4%); Prior 0.2%
  • The key takeaway from the report is that the strength in March was concentrated in the residential sector and particularly in new single-family construction.