Stock Market Update

[BRIEFING.COM] The S&P 500 (flat), Nasdaq Composite (+0.1%), and DJIA (+0.1%) now oscillate around their unchanged levels just after midday as another wave of selling across semiconductor stocks weighs against continued strength in several other mega-cap technology names. A softer-than-expected June PPI (-0.3%; Briefing.com consensus: 0.1%) and a relatively stable day for oil prices have provided some support, though the market's recent back-and-forth across chipmakers continues to drive price action.

Semiconductor stocks remain the primary source of weakness, with the PHLX Semiconductor Index down 4.2% after yesterday's strong rebound. Although ASML's (ASML 1759.38, -16.26, -0.92%) beat-and-raise earnings report initially pointed to another strong session for the group, both ASML and the broader semiconductor space have since reversed course. Memory names such as Micron (MU 889.20, -93.92, -9.55%), Sandisk (SNDK 1539.59, -218.23, -12.41%), and, outside the S&P 500, SK hynix Inc. (SKHY 173.03, -20.89, -10.77%) are among the biggest laggards.

The information technology sector (-1.4%) is the weakest major sector, though its losses have been moderated by continued strength across several of its largest components. Microsoft (MSFT 394.69, +9.76, +2.54%) and (AAPL 327.75, +12.89, +4.09%) are "Magnificent Seven" standouts, while gains in Alphabet (GOOG 370.97, +13.64, +3.82%) and Amazon (AMZN 255.36, +7.87, +3.18%) continue to support the communication services (+2.8%) and consumer discretionary (+1.5%) sectors, respectively.

The Vanguard Mega Cap Growth ETF is up 0.3%, highlighting continued strength across growth-oriented stocks outside of the semiconductor space.

The financials sector (+0.9%) is another relative standout following another busy round of corporate news. BlackRock (BLK 1102.20, +76.76, +7.49%) trades sharply higher after earnings, while Morgan Stanley (MS 227.38, -0.29, -0.13%) now moves slightly lower despite also topping expectations.

Elsewhere, PayPal (PYPL 55.16, +7.78, +16.43%) is the best-performing S&P 500 component after Reuters reported that Stripe and Advert International have offered to acquire the company for approximately $53 billion.

Outside of technology, participation remains mixed. The industrials sector (-1.2%) is among today's laggards as semiconductor-related electrical equipment names remain under pressure, while Pentair (PNR 63.48, -12.20, -16.13%) plunges after sharply lowering its second-quarter and full-year guidance, citing weaker pool equipment demand stemming from a more pronounced inventory realignment and deteriorating business conditions.

The materials sector (-0.9%) is another laggard, pressured by weakness across chemical producers.

Meanwhile, the energy sector (-1.4%) is giving back a portion of its gains from earlier in the week as crude oil prices remain choppy amid a relatively quiet day on the geopolitical front.

Despite another favorable inflation reading and easing oil prices, today's session continues to revolve around the semiconductor trade. Strength across several mega-cap technology stocks has helped cushion the broader market, though persistent weakness in chipmakers has once again proven enough to dictate the direction of the major averages.

Reviewing today's data:

• Weekly MBA Mortgage Applications Index -2.7%: Prior -2.2%
• June PPI -0.3% (Briefing.com consensus 0.1%); Prior was revised to 0.6% from 1.1%, June Core PPI 0.2% (Briefing.com consensus 0.4%); Prior was revised to 0.1% from 0.4%
  • The key takeaway from the report is that it is an encouraging monthly marker of how the inflation data can improve with a decline in energy prices; however, it also reveals on a year-over-year basis that wholesalers are still dealing with high prices. Net-net, this report conveys the need for more improvement in bringing down wholesale prices, but it was better-than-feared when also factoring in the downward revisions to the prior month.
• July Empire State Manufacturing 15.6 (Briefing.com consensus 8.5); Prior 5.7