Stock Market Update

[BRIEFING.COM] The S&P 500 (-0.3%), Nasdaq Composite (-0.8%), and DJIA (+0.1%) are mostly lower just after midday as another wave of selling across semiconductor stocks gradually outweighs the broader rotational strength seen earlier in the session. 

The information technology sector (-1.7%) is the worst-performing S&P 500 sector, pressured by a 4.2% decline in the PHLX Semiconductor Index. Today's weakness follows another double-digit overnight slide in SK hynix Inc.'s (SKHY 160.50, -15.96, -9.04%) Korean-listed shares, while Taiwan Semiconductor Manufacturing (TSM 406.76, -12.72, -3.03%) has faced sell-the-news pressure despite delivering a beat-and-raise earnings report.

Memory stocks continue to bear the brunt of the selling, with Sandisk (SNDK 1451.37, -163.63, -10.13%) and Western Digital (WDC 462.40, -51.44, -10.01%) ranking among the worst-performing S&P 500 components. Corning (GLW 156.76, -17.65, -10.12%) is another notable laggard, while NVIDIA (NVDA 207.43, -5.07, -2.39%) is the weakest-performing "Magnificent Seven" component.

Weakness has also spread across other growth-oriented stocks as the session has progressed. The Vanguard Mega Cap Growth ETF is down 0.9%, while Tesla (TSLA 388.78, -5.68, -1.44%) and Meta Platforms (META 670.47, -10.84, -1.59%) have also turned lower.

Even so, underlying participation remains stronger than the major averages suggest. The health care (+2.2%) and consumer staples (+2.1%) sectors lead the advance, supported in part by strong post-earnings gains in UnitedHealth (UNH 432.41, +13.89, +3.32%) and Abbott Labs (ABT 99.22, +9.95, +11.15%).

The real estate sector (+1.6%) is another relative standout, while the energy sector (+0.9%) remains higher despite crude oil trading modestly lower amid a relatively quiet day of geopolitical headlines.

The S&P 500 Equal Weight Index (+0.7%) continues to considerably outperform the market-weighted S&P 500 (-0.3%), while the Russell 2000 (+0.2%) and S&P Mid Cap 400 (+0.3%) also remain modestly higher, reinforcing the broader rotational nature of today's action.

Meanwile, industrials sector (-0.3%) is another laggard following several notable earnings reactions. GE Aerospace (GE 340.78, -19.56, -5.43%) trades lower despite delivering a solid beat-and-raise earnings report, while United Airlines (UAL 118.58, -2.40, -1.98%) is under pressure after third-quarter guidance came in just below consensus despite a second-quarter earnings beat. Offsetting some of that weakness, Uber (UBER 73.54, +0.87, +1.20%) remains higher after formally announcing a cash offer for Delivery Hero valued at approximately $14.8 billion.

Although today's session initially featured encouraging rotational strength outside of technology, renewed selling across semiconductor stocks has gradually pulled the major averages back toward their session lows. Defensive sectors, the equal-weighted S&P 500, and small- and mid-cap stocks continue to outperform, though persistent weakness across chipmakers remains the market's dominant influence.

Reviewing today's data:

• July Philadelphia Fed Index 41.4 (Briefing.com consensus 11.0); Prior 10.3
• June Retail Sales 0.2% (Briefing.com consensus 0.3%); Prior was revised to 1.0% from 0.9%, June Retail Sales, ex-auto -0.2% (Briefing.com consensus 0.1%); Prior was revised to 1.0% from 0.8%
  • The key takeaway from the report is that the headline disappointments are misleading, as they were driven primarily by gasoline station sales (-5.3%). Excluding gasoline stations, retail sales were up a solid 0.7% in June on the heels of a 0.9% increase in May.
• Weekly Initial Claims 208K (Briefing.com consensus 219K); Prior was revised to 216K from 215K, Weekly Continuing Claims 1.805 mln; Prior was revised to 1.821 mln from 1.814 mln
  • The key takeaway from the report is that initial jobless claims remain historically low and a signpost for a labor market that is still light overall on layoff activity.
• May Business Inventories 0.3% (Briefing.com consensus 0.3%); Prior was revised to 0.6% from 0.5%
• July NAHB Housing Market 34 (Briefing.com consensus 37); Prior was revised to 36 from 35
• June Pending Home Sales -5.4% (Briefing.com consensus 0.4%); Prior was revised to 3.5% from 3.8%