Stock Market Update

[BRIEFING.COM] The stock market is treading lightly ahead of this afternoon's FOMC meeting, with the DJIA's (+0.4%) modest gain enough for fresh record highs, while the S&P 500 (-0.1%) and Nasdaq Composite (-0.1%) oscillate around their flat lines.

Although the major averages do not immediately show it, tech stocks are rebounding from yesterday's pullback. Applied Materials (AMAT 606.24, +38.02, +6.69%) is among the top-performing S&P 500 components, while Broadcom (AVGO 396.69, +19.98, +5.30%) stands out among large chipmakers, helping lift the PHLX Semiconductor Index 3.2%.

The broader information technology sector (+0.8%) holds a more modest gain, as the semiconductor rebound has not resulted in enthusiasm across other mega-cap names. Microsoft (MSFT 384.20, -9.63, -2.45%) is a laggard, while Alphabet (GOOG 363.32, -7.78, -2.10%), Meta Platforms (META 578.64, -21.57, -3.59%), and Amazon (AMZN 239.62, -6.38, -2.59%) hold similar losses, putting pressure on the communication services (-2.3%) and consumer discretionary (-1.1%) sectors.

The Vanguard Mega Cap Growth ETF is down 0.2% as six of the "magnificent seven" stocks trade lower.

Additionally, SpaceX (SPCX 194.93, -6.87, -3.40%) is pulling back today after soaring higher in its first three trading days.

Other underperformers include the defensive consumer staples (-1.3%), utilities (-0.6%), and health care (-0.5%) sectors. Meanwhile, select cyclical sectors are padding their gains this week, which largely contributes to the outperformance of the DJIA. Electrical product names are outperforming amid the rebound in semiconductor stocks, pushing the industrials sector (+1.3%) firmly higher, while the materials (+0.8%) and financials (+0.5%) sectors also benefit from broad strength.

Robinhood Markets (HOOD 108.12, +11.41, +11.80%) is the top-performing S&P 500 stock after announcing a 10% reduction in its workforce, along with some positive analyst commentary.

On the geopolitical front, oil is modestly higher today amid renewed threats of military action against Iran if a more permanent deal is not signed following the 60-day proposed memorandum of understanding, though reports also indicate that an electronic signing of the memorandum could be bumped up to today or tomorrow.

Crude oil remains firmly lower for the week as optimism surrounding a U.S.-Iran peace agreement continues to build. The impact that lower energy prices may have on inflation expectations will soon come into focus with the 2:00 p.m. ET FOMC decision and subsequent press conference from newly installed Fed Chair Kevin Warsh, with investors eager for any signals regarding the Fed's policy path under its new leadership.

Reviewing today's data:

• Weekly MBA Mortgage Applications Index -3.8%; Prior 10.8%
• May Retail Sales 0.9% (Briefing.com consensus 0.5%); Prior was revised to 0.4% from 0.5%, May Retail Sales, ex-auto 0.8% (Briefing.com consensus 0.5%); Prior 0.7%
  • The key takeaway from the report is that it shows real demand. The data are not adjusted for price changes, and retail sales activity in May outpaced the rate of inflation (+0.5%) in May. Moreover, excluding gasoline station sales (+3.4%), retail sales were still up 0.7%.
• April Business Inventories 0.5%; Prior was revised to 1.0% from 1.5%
• May Pending Home Sales 3.8% (Briefing.com consensus 0.9%); Prior was revised to 0.3% from 1.4%