Stock Market Update

[BRIEFING.COM] The S&P 500 (-0.6%), Nasdaq Composite (-1.4%), and DJIA (+0.5%) are mostly lower just after midday as another sharp pullback across semiconductor stocks and select mega-cap names weighs on the major averages, while broad strength elsewhere in the market keeps the overall tone constructive.

The S&P 500 briefly traded above the 7,500 level earlier in the session before reversing alongside semiconductor stocks. The PHLX Semiconductor Index, which was up more than 1% shortly after the open, is now down 6.1%. There has been no obvious catalyst for the reversal, with today's action appearing to reflect a continued unwinding of the group's recent momentum trade after two strong sessions to start the week. The slide has pushed the semiconductor index back into negative territory for the week.

The information technology sector (-1.9%) is the day's weakest performer, though Apple (AAPL 307.19, +12.81, +4.35%) and Microsoft (MSFT 389.24, +4.96, +1.29%) continue to provide meaningful support.

Elsewhere among the mega-cap names, Meta Platforms (META 585.39, -27.52, -4.49%) is giving back a portion of yesterday's rally, while Tesla (TSLA 391.65, -33.65, -7.91%) has reversed sharply after initially climbing on a better-than-expected second-quarter deliveries report. The Vanguard Mega Cap Growth ETF is down 1.3%, and the communication services (-1.9%) and consumer discretionary (-0.8%) sectors join information technology among today's laggards.

Despite the weakness across technology, the broader market continues to show healthy participation. Seven S&P 500 sectors trade higher, led by the health care (+2.2%), consumer staples (+2.1%), utilities (+1.5%), materials (+1.3%), and financials (+1.2%) sectors. The rotation into health care has become increasingly pronounced, with the SPDR Health Care ETF (XLV) climbing roughly 9% over the past two weeks while the PHLX Semiconductor Index has fallen approximately 12% during the same stretch.

As a result, the S&P 500 Equal Weight Index (+0.3%) continues to outperform its market-weighted counterpart, reinforcing that today's weakness remains concentrated in a relatively small group of influential stocks rather than the broader market.

So far, today's action suggests investors continue to rotate within the equity market rather than exit it altogether. While the S&P 500 has once again struggled to hold above the 7,500 level amid renewed semiconductor weakness, continued leadership from health care and several other sectors points to a market that remains constructive beneath the surface.

Reviewing today's data:

• June Nonfarm Payrolls 57K (Briefing.com consensus 110K); Prior was revised to 129K from 172K, June Nonfarm Private Payrolls 49K (Briefing.com consensus 88K); Prior was revised to 97K from 120K, June Unemployment Rate 4.2% (Briefing.com consensus 4.3%); Prior 4.3%, June Average Hourly Earnings 0.3% (Briefing.com consensus 0.3%); Prior 0.3%, June Average Workweek 34.3 (Briefing.com consensus 34.3); Prior 34.3
  • The key takeaway from the report for the market, which likes to see the good in the bad, is that the softer payrolls and pressure on real earnings should temper concerns about an imminent rate hike.
• Weekly Initial Claims 215K (Briefing.com consensus 220K); Prior was revised to 216K from 215K, Weekly Continuing Claims 1.814 mln; Prior was revised to 1.812 mln from 1.821 mln
  • The key takeaway from the report is that initial jobless claims continue to track at low levels, offering a nice cue that suggests the labor market, overall, remains on solid ground.
• May Factory Orders -1.3% (Briefing.com consensus 1.5%); Prior was revised to 5.3% from 4.8%
  • The key takeaway from the report is that the headline weakness was a function of a large decline in volatile transportation equipment orders. Exclude that factor, and factory orders were quite solid in May.