Stock Market Update

[BRIEFING.COM] The major averages are back near session highs as semiconductor stocks bounce off their worst levels in what has been a choppy morning for the group.

Meanwhile, the communication services sector (+2.8%) has added to its opening gains. Comcast (CMCSA 24.92, +1.76, +7.57%) shares are higher after the company said it will separate NBCUniversal and Sky into an independent public company through a tax-free spin-off, leaving Comcast focused on broadband, wireless, and connectivity. The move appears to be the clear catalyst for the rally, as investors are responding to the prospect of two more focused businesses, dedicated management teams, and a cleaner valuation framework after the stock had been trading near its recent lows. Under the plan, shareholders will receive shares in both companies, the transaction is expected to close in about one year, and Comcast may retain up to a 19.9% stake in NBCUniversal for up to one year after the separation. The main offset is execution risk: the deal will take time, leadership will shift, and investors still do not have detailed standalone financial targets or guidance for either company.

The move weighs on other wireless telecom/broadband stocks such as Verizon (VZ 42.98, -3.56, -7.65%), T-Mobile US (TMUS 171.30, -11.38, -6.23%), and AT&T (T 21.34, -1.38, -6.07%), as Comcast now becomes a pure-play broadband, wireless, and business services company.

Those names are also members of the communication services sector, but their losses are outweighed by broad strength in the sector, solid mega-cap leadership from Alphabet (GOOG 348.26, +13.57, +4.05%), and a sharp gain in Charter Comm (CHTR 148.45, +14.81, +11.08%)after Bloomberg reported the company is in discussions with SpaceX about a mobile phone partnership.